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Tuesday 11/07/06 ELECTION DAY MORNING UPDATE at 10:34 AM EST
Markets continued to rally today as voters go to the polls to give traders what they want according to traditional wisdom which dictates that gridlock is good. Pundits are of the opinion that a Democratic blowout or the GOP status quo will cause the markets to react negatively tomorrow.
If the markets plunge it will be because traders were looking for an excuse. The action of the last two days has erased last week's pullback and now looks like we could settle out the day at a decision point as uncertain as the outcome of the election.
Prices are either forming a short term double top or they are getting ready to launch into the new leg for the Bulls.
Either way, we now have powerfull market data that should propel us well into next year even if we do get a short term retracement from here. I would have been happier to see more of a dip last week which would have set the stage for a guaranteed continuation, but just like the elections at this point, we will just have to "wait and see".
Will have a couple more stock of the day picks for you later in the day...
VOTE
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Sunday 11/05/06 STOCK OF THE DAY FOR 11/6/06 at 03:20 PM EST
Gonna take one of the Weekly stocks from Sunday's report as our Stock Of The Day because it meets all of the criteria I look for in a continuation of the breakout and has an upside target of 30% in the short term which certainly makes it worth the play. The stoploss is short (just under the previous low before the breakout), so the risk reward is $4 to make $15 or almost 4 to 1.
Henry Ford- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SUNDAY WEEKEND UPDATE FOR 11/5/2006 at 03:08 PM EST
Markets will be on hold till Wednesday with the mid-term elections and unless we have a Democratic blowout that takes control of both the House and the Senate, the results are baked into the indices. While there maybe some roiling around on Wednesday I expect things to get back on a positive footing very shortly after the brief rest and pullback we have seen on 5 solid weeks of gains.
Traders will be happy to see a split congress because it should reduce spending while the two sides battle it out with neither in control and will put up with an all Republican House and Senate because it will maintain status quo as far as taxes and corporate treatment.
Earnings were spectacular again and PEs are set to give us at least a couple of more quarters of solid growth. It is also time for the Techs to begin to come into their own after a long Hiatus and I think next year will be the year for the beleagured sector to shine.
Gold and Silver are hot and getting hotter and while OPEC is making serious noises about cutting production, nobody is going to believe it till they see it. We had some unrest in Nigeria and a small refinary fire over the weekend, so we may see a short term pop in energy, but I don't expect it to hold. There is just too much supply in the pipeline to sustain higher prices after we came of a non-existent hurricane season and shorter than expected down time on the BP North Slope pipeline.
I would still like to see a little more downside consolidation here, perhaps down to the DOW 50 day moving average around 11,800 or so and SPX 1340, but I am not sure that buyers can stay away that long.
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