Many market players were anticipating a trade into the election on Tuesday, but they were caught by surprise by the FBI-induced strength this morning. It seemed likely on Friday that the uncertainty that had been weighing on the market would continue, but the view this morning seems to be that the scale has been tipped in favor of Hillary Clinton.
Another aspect of the election that will impact the market is control of Congress. The Senate race has been tightening, and it is now an even chance that Republicans maintain control. Ideally, gridlock is what the market wants, and it appears that things are moving in that direction.
Of course, the big issue here is whether the polls are accurate. The Trump supporters are confident that there is a silent vote that isn't being counted, but we won't know until Tuesday night if that is just wishful thinking.
Our job is to navigate this market, and it isn't that easy. We have gap and hold action so far. With so many folks underinvested as a result of a couple of weeks of weakness, there isn't a big rush to flip into the strength to lock in gains. The big issue is putting capital to work. To do that, you have to be willing to buy some charts that are broken.
We have breadth running better than five to one positive, but only a little over a 100 stocks hitting new 12-month highs since they have come down so much. Only about 20% of stocks are over their 50-day simple moving average, so there is a lot of damage to fix.
My Stock of the Week, Hudson (HDSN) , which I discussed recently, is off to a very good start and looks ready to test recent highs around $7.
A couple other names I've mentioned recently include Oclaro (OCLR) , Celgene (CELG) and ProSharkes Ulta S&P 500 (SSO) . I have plenty of cash on hand and will be looking to add, but at this point I'm not doing much chasing.