November 8, 2016
By Mish Schneider
John Fogerty and Creedence Clearwater Revival released the song “Hey Tonight” in 1971. The song refers to a revival meeting. He’s gonna fly, find his soul, go to the rafters and watch his girl get religion.
After what seems like forever, tonight the country will find out who our next President is. Some will fly, some will find their soul, some will “hit” rather than go to the rafters. Some will see their partners find or lose religion.
Regardless of the outcome, it behooves us traders to stay on path and us analysts to help you stay on yours.
Eliminating hype and fear from trading requires one to adeptly read the fundamental and technical signals.
A Macro top down approach which includes analyzing the indices and major sectors and groups paints the overall picture. Then, following the list of ETFs I write about each night below, we look at commodities, country funds and interest rates/currencies.
Considering the rally over the last 2 days, the market appears to anticipate a Clinton win. If so, what opportunities might we see emerge?
If the market’s anticipation proves wrong, then what?
First a simple fact: The best performance of the Dow since 1901 has come when the Democrats control the White House and the Senate while the Republicans control the House. The average gain is 24% with no down years!
The recent leaders have been the Dow Jones and DIA along with the Transportation sector. With confirmed Bullish phases in all and in homage to Mr. Dow himself, continued strength here equals strength in the US economy.
However, do not discount the impact of Granddad Russell 2000. Considerably far from the moving average that would take it from warning to bullish, failure to hold around the 117 level would not bode well.
The major theme throughout the campaign and in the market this year has been divisiveness. Before we recommend going full hog long or short, we need to see reconciliation among the top groups and sectors.
That means regardless, until resolution occurs, investors should keep risk on the low side.
The election outcome will impact commodities, interest rates and the US dollar. It will impact the energy and alternative energy stocks and ETFs.
Furthermore, it will impact defense, cybersecurity, gun, healthcare and big pharma stocks. One area of consistency no matter who wins, legal recreational marijuana will provide more opportunities over time.
A trading plan of which specific stocks and ETFs to focus on for longs and shorts will be my major focus for the rest of 2016 and into 2017.
Finally, to combat stress ahead of tonight’s results, Copy/Paste this link to hear Fogerty’s song: https://www.youtube.com/watch?v=i1PpTXtlnb0
S&P 500 (SPY) Grazed the 50 DMA but did not get through. Makes 214.50 area resistance to clear and 212 pivotal support to hold
Russell 2000 (IWM) 117.50 support, 120.50 1st resistance the 50 DMA 121.76
Dow (DIA) 182.30-182.50 support to hold. 184 next hurdle
Nasdaq (QQQ) Grazed the 50 DMA but did not get through. Makes 117.36 area resistance to clear and 116.25 pivotal support to hold
KRE (Regional Banks) 43.50 support. Back over 44.20 better
SMH (Semiconductors) Confirmed bullish phase 67.40 support and must clear 69.40
IYT (Transportation) 146 now pivotal. 150-151 last December highs to clear
IBB (Biotechnology) 256 support and 272 big overhead resistance
XRT (Retail). 42.00-42.25 resistance that must clear for starters. Still weak
IYR (Real Estate) 75.20 now the support to hold if good
GLD (Gold Trust) Too choppy intraday to trust but it failed to close above the 200 DMA
SLV (Silver) 17.00 support to hold
GDX (Gold Miners) Confirmed back to a Distribution day
USO (US Oil Fund) Like gold, an anything can happen from here
TLT (iShares 20+ Year Treasuries) Support at 130. Then 128. The Weekly MA 131.90.
UUP (Dollar Bull) 25.34 today’s high Resistance to clear with 25.20 closest support
EEM (Emerging Markets) Confirmed bullish phase
Every day you'll be prepared to trade with: