If it wasn't for yesterday's GE hiccup, it would've been back to back strong closing days, excluding monster Tuesday! This would've been impressive because these two days were built on top of the near 1k pt rally on Tuesday. However, in spite the fact we've gained that many points, we are all of a sudden facing the familiar resistance territory, again!. Even, the 'triangle' on the SPX points to a probable top for the time being. Yes, it feels like we've been here before.
So what's the smart trade here? We are just thinking that point gains like we had from the previous three days need to be digested. That means we are looking for some stability. We definitely have come down to more of a normal hi- low range for 2 days now, the market has not moved "too much" in either direction off the morning gap level. Most of the plays on our list have closed near the opening price. Even though you almost had to have some overnight positions to enjoy a day like today, the action is nonetheless encouraging. Ok, here's the thing! We aren't calling this latest move anymore special than the moves preceding it. A move needs to be proven in order to be special and that is something we can only confirm in retrospect. For now, we are doing little trades to fade the move as it approaches the previous resistance. If for some reason, this market decides to break through the resistance, convincingly, we'd tag along for the ride too. If you've been riding the 3 day move since Tuesday alerts, we'd definitely expect you to take profits and look to the potential resistance for a short. If say Oil is down tomorrow, you should look to short a few names that have made nice upside moves.
We can't believe the election is merely days away, we thought this process would never end. This has to be on many investors' mind as to figure out "what if" scenario when the next administration takes over. Right now, we are hoping, and just hoping that the election and post election period will bring some stability to this market. A somewhat rational and a calmer market will bring a lot of institutions/ fundamental investors back to this market. Valuation is at the lowest in years and we firmly believe it's just a matter of time some people decide to take advantage of it. As far as a long bear market and a severe recession talk go, we feel nothing happens overnight. It means that even this market goes into even long bearish mode, we can still deal with it, as long as the market trades in a sensible fashion.
Have a good weekend