Bit of a shocker over night with the Blue Wave in the mid-terms although all the polls were predicting it. Today looks like a relief rally to me rather than a result which is broadly bullish for stocks. Both parties are essentially locked in what they can do so maybe some certainty (without as many surprises from Trump) is good for markets. Todays action and support is driven by the hyper scalers - those with data centers already in place - and some of the sectors that will do well with the Republicans being sterilized by the Democrats over night - like Solar for example. There is a lot of over reaction in my view today and oil is a particular concern of mine. It has sold off a lot today (9.2%) but that could be a very short term move and big bear trap. Trump still has the power to strike Iran and he will want to exact revenge on someone. Food for thought.
Market Overview
SPY is having a strong session today, bouncing hard off recent lows and printing its first close back above the 21 EMA after a rough stretch that saw it drop from 772 to 752 in just a few days. That October 30 and November 2-3 selling was ugly, so one close back above the 21 EMA at 765.47 does not confirm a full recovery yet. The 8 EMA at 762.56 and 21 EMA at 765.47 are converging bearishly, so we need to see follow-through from here before getting too excited. VIX at 17.4 is calm enough, but the burden of proof is on the bulls to hold today’s close and build on it tomorrow.
The dominant theme in morning flow is a tug-of-war on SPX macro positioning, with a large bearish risk reversal cluster totaling over $125M in premium leaning near-term defensive into November expiry, while multiple bullish risk reversals and outright call buying on SPX and QQQ push back with meaningful size. QQQ put selling and call buying both point to institutional willingness to stay long tech exposure, and MRVL is seeing a split, with put selling on one side and sizable put buying on the other, suggesting real disagreement at that name heading into year-end.
Today’s top large cap picks on my scanners. I have 5 different ones available in my Trade Analysis dashboard on my full trading platform.
Judah’s Scanner:
Momentum Scanner:
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