The nation is still waiting for the outcome of the presidential election, which might take days to count the votes, and even longer if lawyers get involved.
But there are narratives that inform the market this morning. First, let’s look at the action ahead of the election. The market rallied strong into Election Day, which I thought was a clear sign there would not be a so-called Blue Wave.
In fact, there wasn’t even a Blue Ripple. The market loves that, as there will not be draconian actions that dismantle the underpinnings of growth that was more widely shared until coronavirus arrived on our doorstep.
Market breadth was very impressive for the second straight session with convincing volume and a shift back to more 52-week winners than losers.
Market Breadth | NYSE | NASDAQ |
Advancing | 2,482 | 2,820 |
Declining | 586 | 691 |
52 Week High | 62 | 52 |
52 Week Low | 13 | 27 |
Up Volume | 3.48B | 2.48B |
Down Volume | 617.16M | 642.69M |
S&P 500 winners are on the rise, although there are still far more losers.
- 231 winners with average gain +24.3%
- 274 losers with average loss -23.15%
There are now more winners than losers on the NASDAQ Composite.
- 519 winners with average gain: +65.15%
- 496 losers with average loss: -25.19%
If Joe Biden pulls it off, there will be very little of his agenda he could simply ram through, and it’s unlikely a GOP Senate would play along on the more draconian stuff. This could still be good news for solar stocks and electric vehicles.
Joe Biden Policy Proposal | Required for Approval |
Repeal Tax Cuts Act & increase capital gains taxes | Congress/51 Senate votes |
Provide additional fiscal stimulus | Congress/60 Senate Votes |
Expand ACA and create public option | Congress/60 Senate Votes |
Allow Medicare to negotiate drug prices | Congress/60 Senate Votes |
New Carbon tax, ban offshore drilling, but not fracking | Congress/60 Senate votes and some exec authority |
New investments in alternative energy & nuclear power | Executive Authority |
Increased banking regulation | Executive Authority/Court Challenges |
Abolish private prisons | Congress/60 Senate Votes |
Infrastructure | Congress/60 Senate Votes |
Increased technology regulation | Executive Authority/Court Challenges |
Marijuana decriminalization, but not legalization | Congress/60 Senate votes |
Two years of free college & expand debt relief | Congress/60 Senate Votes |
Raise minimum wage to $15/hour | Congress/60 Senate Votes |
Crack down on China / reevaluate tariffs | Executive Authority |
Source: Briefing.com |
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The market will open gingerly, but investors think big Technology and Communication Services companies are winners. There will be no massive capital gains taxes and more H2B workers. The NASDAQ Composite is trapped in a decided range, but could break the trend today.
Portfolio Approach
We closed two positions yesterday, one in Healthcare and one in Technology, and we added to Consumer Discretionary in the Hotline Model Portfolio.
America on the Move
As I drove into the work this morning, I could not believe all the radio commercials for truck drivers. Schneider touted $0.04 a mile for experienced drivers and $0.02 for new drivers, suggesting many could earn $90,000 annually. Walmart talked about all the benefits.
The economy is on the move, and the great news is there probably will not be efforts at mass lockdowns.
To see the chart, click here.
Today’s Session
I think a worst-case scenario for the market has been avoided, but let’s hold off for the count and potential legal battles.