This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

New Political Facts on the Horizon

Briefing.com

Contributor:
Briefing.com
Visit: Briefing.com

By:

Chief Market Analyst

Election Day is here. Whether the election result arrives on Election Night is what everyone is wondering. That point notwithstanding, the futures market doesn’t appear to be suffering from any bouts of uncertainty.

Currently, the S&P futures are up 39 points and are trading 1.1% above fair value, the Nasdaq 100 futures are up 75 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are up 376 points and are trading 1.3% above fair value.

This positive disposition comes on the heels of a late-day rally yesterday that saved a good day from turning into a disappointing day. Led by its cyclical components, the S&P 500 gained 1.2% while the Dow Jones Industrial Average advanced 1.6%.

Noticeably, the Nasdaq Composite trailed with a 0.4% gain, as its mega-cap stocks, and other growth stocks, lagged in the midst of a calculated trade into value and cyclical stocks.

Even so, the broader point is that the broader market won its rebound bid on Monday coming of the worst week of losses since March.

That rebound bid will persist at today’s open and there is enough political spin right now to make a case from any angle as to why the market now seems to be in a good mood despite not knowing anything specific about the election outcome that it didn’t know last week when it declined 5.6%.

It also seems to be in a good mood despite similar-sounding coronavirus headlines (rising case counts and positivity rates, restrictions on business activity, increasing hospitalization rates, etc.) that were viewed as a driving factor behind last week’s selling interest.

One can say then that this rally effort is nice to see, but that it doesn’t have the deepest of roots yet since it has sprung up mostly on a belief that the market got oversold last week and secondarily on a hope that a contested election outcome will be avoided.

The latter could all change by this point Wednesday… or…. it could be validated and help loosen the soil that allows for the planting of a stronger rally effort.

There’s just no telling right now, but the gains count all the same. If the current futures indication holds, the S&P 500 at today’s open will have recovered roughly 80 points of the 195 points it lost last week, or roughly 40% of those losses.

That’s a healthy move in a two-day stretch that isn’t even fully two-days old, yet it’s par for the course for a market that has feasted on buy-the-dip opportunities.

What happens tonight is anyone’s best guess, but that’s all it is right now. The speculation phase, though, is coming to an end and new political facts will soon be presented that provide added meaning to the market’s near-term direction.

Originally Posted on November 3, 2020 – New Political Facts on the Horizon

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Briefing.com and is being posted with permission from Briefing.com. The views expressed in this material are solely those of the author and/or Briefing.com and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.

trading top