Playing the Election…
For today, look to fade whatever move occurs after the presidential election results are announced. If Bush wins, look for a rally. But because that’s probably already priced in, we could see profit-taking. If Gore wins, we could see a sell-off, and then the market will creep back up.
As for today, S&Ps were at 1448.50, which is up 450 on a massive range of 1431.70 low to 1454.80 high and very solid volume overnight. The low was made shortly it was announced that Gore had won Florida. And the high was made after it was announced that the Bush would win the presidency. And now that nobody knows, we’ve come off a little bit.
On the upside, we have small resistance at 1450; 1445.50 was the high yesterday. Then we have 1451.50, 1453, 1455-1456 and 1459; these are all small key areas. A major objective is at 1460.50. On the downside, we have 1445, 1442 which is very key.
Yesterday, 1441-1442 was our swing area. In the morning we hit a high of 1441.80 and then broke down to the low. Then we came through 1441.80 we went up and made the highs. Below that is 1439.50, 1437.50, which is a major area, and then 1433.50. Yesterday’s low was 1432.
As for the NASDAQ, right now trading up 900 at 3323. Volume has been more on the tame side. Made a low of 3250 last night, and a high of 3375. Yesterday’s trade was interesting given the performance of some key stocks, such as JDS Uniphase
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PowerRating) and its failure to make any headway to the upside given its recent troubles. Yesterday it closed down nearly 4 points, and was a pretty good proxy for the market. We expect this to continue today. There was a strong sell-off in issues related to Cisco
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PowerRating).
Today will be interesting in terms of PMC-Sierra
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PowerRating), and if it can come in with some type of rebound given the negative news yesterday. We have now bounced off our lows, and the market has moved in a slow, upward fashion. The velocity we’ve seen when we’ve had rallies as been from lower levels. This needs to change. In the next week, if this rally is any good for the bulls, this market needs to build from this base with a very strong rally.
Yesterday’s action in some key stocks is leading us to think that this rally may not occur, but as with the election –“it’s too close to call right now.”
For today, we see support between 3311 and 3294. If we get through 3294, look for a move to 3270. There is light support between 3272 and 3268; through this look for a challenge of yesterday’s low of 3238. We would expect this to be exceeded for a move down to 3205. Limit down will come in at 3219.
If we get sustained trading below 3225, there is a good chance for a move down to 3160. We’d be very surprised if the market were to settle under 3200; if it did, it would be a strong negative moving forward. First leg of resistance is at 3325-3333; if we get above this look for a move to 3380. Along the way, 3375-3385 is resistance.
If we move above this zone, the key is going to be 3420. If we get above 3420, especially on an hourly close, the upside looks really good, and we expect an eventual move into the 3650-range. Any settlement today above 3400 should be construed as bullish, and it becomes more bullish if we settle above 3420.
The Dow is probably the index that has the most to lose, depending upon who is elected. If Gore is elected, certainly there could be a sell off down to 10,600-10,650 level. We’d be buyers below 10,700 in the cash and toward 10,500. Any euphoric rally off a Bush election toward the 11,200 would be a good place to initiate shorts for a spike reversal trade back toward 10,900.