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Dow Adds Triple Digits on Election Day
By: Schaeffer's Investment Research
Dow Jones Industrial Average (DJI)
spent the session comfortably higher, notching a triple-digit
victory by the closing bell. "Although volume has been relatively
light, we enjoyed a pretty nice Election Day rally," said
Schaeffer's Senior Equity Analyst Joe Bell. "This reminds me of
four years ago, when we also had a strong, positive move on
Election Day. Overall, we're seeing a lot of strength from crude
oil, gold, and other commodities, especially as the dollar
displayed quite a bit of weakness."
- What to expect the session after Election Day .
- Why this gold ETF offers an attractive risk/reward setup.
Daily Game Plan : Schaeffer's Senior Trading Analyst Bryan Sapp suggests the markets could be pricing in an Obama victory .
And now, a look at the numbers...
The Dow blazed a trail higher right out of the gate today, topping out at 13,290.75 around midday. The bullish momentum waned just slightly in the final hour of trading, though, with the blue-chip barometer paring its lead. Today marks just the second close north of 13,200 since Oct. 22 for the Dow.
The S&P 500 Index (SPX) also spent the day in the black, ending north of its 20-day moving average for the first time since Oct. 18. Meanwhile, the Nasdaq Composite (COMP) ended with a slimmer victory, but retook its perch atop the 3,000 marker.
The CBOE Market Volatility Index (VIX) pared a portion of Monday's gains, surrendering roughly 4% to end back beneath its 200-day trendline.
Today's highlight : "We can try to focus on the stock market all we want, but today is all about politics and one of the most anticipated -- and close -- presidential elections in years," said Bell. "There's a lot of uncertainty surrounding this event, but this day only comes around every four years. All eyes will be glued to the television tonight."
More of today's big stories:
- Schaeffer's contributor Adam Warner highlights an interesting development regarding the VIX curve.
- Option traders placed pre-election bets on UnitedHealth ( UNH ) and Peabody Energy ( BTU ) .
- Zillow ( Z ) and Express Scripts ( ESRX ) were slapped with post-earnings price-target cuts , while Chipotle Mexican Grill (CMG) and Silver Wheaton (SLW) scored bullish brokerage notes .
- Analysts remain enamored of underperforming Pandora Media (P) .
- AOL (AOL) tagged a record high after unveiling stronger-than-expected earnings .
- The options crowd is bracing for pullbacks in Microsoft (MSFT) , Citigroup (C) , and Facebook (FB) .
- Blue chips Exxon Mobil (XOM), Pfizer (PFE) , and Hewlett-Packard (HPQ) were popular in the options pits.
And, in case you missed it ... Our own Bernie Schaeffer offered his two cents on the short-term prospects of the SPDR S&P 500 ETF Trust (SPY) .
For today's activity in commodities, options, and more, head to page 2.
Crude futures followed equities into the black, touching a two-week high on hopes for rebounding demand. In addition, concerns about a post-Sandy supply shortage were favorable for the commodity, as was a weaker dollar. By the time the dust settled, December-dated oil advanced $3.06, or 3.6%, to end at $88.71 per barrel. In the same vein, gasoline for December delivery jumped nearly 8 cents, or 3%, to end at $2.70 per gallon, thanks to a short-term shortage of gasoline on the Sandy-ravaged East Coast.
Gold futures extended their rebound today, as investors flocked to the "safe haven" ahead of the presidential election results. Furthermore, the ailing greenback also contributed to the malleable metal's gains. By the close, December-dated gold soared $31.80, or 1.9%, to end at $1,715 an ounce. Elsewhere, silver for December delivery tacked on 91 cents, or 2.9%, to finish at $32.03 an ounce.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 13,245.68)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,428.39)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 3,011.93) - support at 2,400; resistance at 3,400
At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.