The tone of the action has improved as the day progresses and stocks continue to press to the upside. The bounce action combined with positive anticipation for the earnings reports tonight is helping sentiment. Typically, I'm not too quick to fight the potential for a V-shaped bounce but in this case, I'm afraid that the election issues are going to dominate again Friday and Monday, and that will keep money on the sidelines. I will be very surprised if we see a rally into election day but there might be some inclination to position long in hopes that there will be a quick resolution.
The consensus view is that there will be a post-election rally that will be fueled in part by stimulus and in part by increasing hope that progress is being made against Covid. The policies of whoever wins won't matter at first but they will have a significant market impact at some point next year. It just isn't an immediate concern given the issue of election chaos and stimulus.
I do like the way many individual stocks are developing. Some of my favorite small caps have pulled back sharply and are finding support. If the market can start to generate some upside momentum after the election there will be some very good entry points. Things can move quickly once the smoke clears so it is important to have a shopping list in mind but right now the main thing to do is cultivate some patience.
I have no idea what the election will bring but I am optimistic about the opportunities that will develop after it is over and we begin to see Covid vaccines and more focus on a return to normal.
I will view any significant weakness in the next week or so as a potential opportunity but I'm not going to focus on fast reaction rather than anticipation.
I suspect we are going to see some 'sell the news' hit on earnings tonight which will produce some negative sentiment into the election.