Well, we didn’t get an election winner Tuesday night and don’t have one yet as I am writing this in the early Wednesday hours. We may not get one until the end of the week now.
And the stock market doesn’t seem to care this morning as its reaction to this lack of finality is fairly muted.
What we need to takeaway from this is that when it comes to the markets right now the only thing that matters is the charts – not the news, not the state of the economy, not earnings, and not even who the President is.
For stock market bulls the good news is that the S&P 500 is now oversold on its daily stochastics and looks like it wants to put in a short-term double bottom.
A close above the 50-day moving average right at 3400 would generate a buy signal on the stochastics by causing both of them to close above 20. In my view it looks like the market is poised to rally up to the 3600 level by Thanksgiving. Maybe it won’t move much until the election is resolved and we might not get the buy signal until then, but it does seem that the market isn’t really worried about it. One reason why is that the market already dipped into it last week.
Tuesday afternoon before election results started to come I talked with Jim Goddard of www.howestreet.com about the financial markets, including the problem with “safe haven” bonds, gold, commodities, and more.
Gold is looking good. We got one buy signal Monday on gold and a second one will trigger the next big run, which should last into the end of the year. You can see what I mean in the chart I did Monday. Everything looks for good for my top stock pick for November.
-Mike
