Stocks Rally on Election Day
Tuesday, November 2, 2010
Stock Market Commentary:
Stocks rallied on Tuesday as the nation went to the polls. Volume patterns remain healthy as the major averages have now begun their 10th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.
Elections & QE2 Send Stocks Higher:
Stocks rallied as the US dollar fell in anticipation of a republican victory and QE2 which is slated to be announced on Wednesday. Politicians are making one final push to attract voters before polls close later today. For over two months, stocks have steadily rallied as many believe the market is ready for a republican victory and QE 2. It is encouraging to see leading stocks continue to act well (AAPL, CMG, BIDU, PCLN, NFLX, FFIV, etc.) which is a strong sign for this 10 week rally.
Market Action- Confirmed Rally, Week 10:
Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and over the past few weeks, the tape remains somewhat sloppy. Trade accordingly.
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