Commentary: Paul Ebeling on Wall Street; Big Week, Election and Earnings

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The likelihood of a Trump victory has not been factored in to stock prices“– Paul Ebeling

Last week’s action

Stocks to consolidate last week the big move off of the 24 September lows, tested and reversed Thursday, tested again, and rallied on heavy volume. All economic news was solid. The Big Names produced Big Results.

Technical analysis

NAS 100 gapped higher Thursday rallied up through the 50-Day EMA and faded into the close just below the Key resistance. Since it had lower volume, it could not move through its resistance, tested Friday just above Key support and rallied into the close.

S&P 500 rallied too but only made it to the Wednesday lower gap point and then faded to a modest gainer. It did not quite test the September low on Wednesday, Friday, the S&P 500 another look at Key support and railled into the close.

This is Election wk, coupled with continuing earnings reports

A swift decisive victory for President Trump and a status-quo Congress, with the Senate under Republican control and the House held by Democrats will be seen by investors as positive for stocks. Add to that a Republican take over of the House will be seen as Very positive for stocks.

President Trump has presided over the fastest and largest GDP growth in the nations history.

A 2nd Trump term lays to rest concerns over higher taxes and increased regulations, and while his Y 2016 promises of huge infrastructure spending have not been realized yet, extra expenditure in that sector now will help construction companies, steel-makers and provide millions of blue-color jobs.

The President’s protectionist stance will also help businesses with domestic operations and boost the Oil & Gas industry. Weapons makers will be back in focus.

The S&P 500 had rallied 58% since Donald Trump’s Y 2016 victory to a record in February before The China Act of War Virus shuttered businesses and pushed the US economy into an instant recession. The benchmark has recovered those losses after wiping out 3.5 yrs of gains in March.

The likelihood of a Trump victory has not been factored in to stock prices, that said I see both value and growth in our basket.

Deep value; energy and financials will lead the next leg of this long running Bull market. Over 82% of earnings have surprised to the Northside and been ignored during the past 2 wks of this consolidation. Expect this wks earnings reports to be very good too.

Remember, always take what the market gives, do not fight the Fed or the tape, and since it is your money, it is your responsibility to pay attention

Have a healthy week, Keep the Faith!

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