For the second day in a row we have choppy and sloppy action but with a slightly positive bias. Breadth is running well with around 4,200 gainers to 2,550 decliners.
What is particularly interesting is that new 12-month lows have declined substantially. They are around 70 right now compared to 60 new highs. That is the best ratio of highs to lows in a very long time.
Apple (AAPL) has managed to find some support around $202 and that is helping the Nasdaq 100 ETF (QQQ) to finally bounce after lagging the last couple days. The Russell 2000 ETF (IWM) is doing a nice job of holding on to recent lows.
Under the surface, individual stocks are displaying quite a bit of choppiness and that is making trading challenging. This is not a market for trend followers with longer time frames. The best style to deal with this environment is day trading, which is not for everyone.
With the election results rolling in Tuesday night, traders are trying to find some possible themes. There is talk that infrastructure may be one area of bipartisan support but I'm not seeing much developing in that group right now.
Another sector that I'm watching is cannabis-related stocks. Pot is on the ballot in a number of states and supporters are optimistic that a push for national approval will come sooner rather than later. If Attorney General Jeff Sessions were to leave, as is likely, it may boost pot stocks, as he is a strong opponent of legalization.
In the group, Canopy Growth (CGC) , Cronos Group (CRON) , Tilray (TLRY) and Pyxus International PYX are all seeing interest. This may fizzle out quickly after the election but they are in play at the moment.
On Monday I mentioned NIO, Inc. (NIO) . The company produces electric cars in China. It announced earnings last night. The company delivered 3,268 vehicles in the third quarter versus 100 in the prior quarter and projects it will deliver a further 6,700-7,000 by the end of the year. That is interesting progress and, while there is a likely China "discount," NIO is on my radar to watch for further development.
Eli Lilly (LLY) reported earnings Tuesday morning and may be part of another sector that is impacted by the election. There is some fear or hope (depending on your focus) that if the Democrats gain control of the House there may be a greater push for drug-pricing controls. That notion has been hurting biotechnology for a while now but this issue should come to a head one way or the other.
The Lilly report was not bad with better earnings per share than expected and an increase in guidance. However, the company is only looking to grow earnings next year by about 5-6%, which isn't very impressive given the P/E multiple. The stock is trading down over 3% on the news.