Do you feel lucky?  A question all traders will have to ask themselves today as they plan for the possibility of massive volatility in the aftermath of election day.  Back to back, 400 point gaps will push the index charts into substantial price resistance levels.  As we always say in Right Way Options, gaps are gifts. Heading into such an uncertain outcome may be wise to capture those gains and reduce the risk because anything is possible in the next 24 hours.  Experienced day traders will have the upper hand while swing and position traders will have to roll the dice and hope.  Be very careful!

Asian markets rallied overnight, reacting to the Australian central bank lowering rates.  European markets are decidedly bullish this morning, with the FTSE and CAC surging more than 2% this morning.  Ahead of a very news-driven day with both earnings and economic data on the horizon, futures point to another big gap up open.   Expect significant price volatility.

Economic Calendar

Earnings Calendar

With nearly 90 companies reporting their quarterly results on this election day, we can expect considerable volatility.  Notable reports include BHC, CC, DS, ETN, EMR, EXC, EXPD, FOXA, GCI, IT, GAIN, GWPH, HTA, HUM, LPX, PRU, RHP, SYY, TRI, & W.

News & Technicals’

U. S. Futures early this morning suggest back to back 400 point gains!  The indexes have experienced a short-term oversold condition, but I must admit a bit of surprise to see the wild bullishness on an uncertain election day.  As polls open across the country, businesses have boarded up, bracing for the possibility of riots in the aftermath.   Although the voting will be over, will all the uncertainty be over, or will this election drag on being contested?  On the virus front, Connecticut decided to roll back reopening as infection rates continue to surge. Let’s hope for the sake of the economy; this is not a trend that accelerates across the country with infection rates rising and antibody drugs in short supply. 

With another big morning gap up, traders holding long positions may want to consider it a gift and take the profits ahead of the possible election results volatility.   It’s entirely possible the T2122 indicator could flip from oversold to overbought with the substantial gaps in the last couple of days.  Remember the wild market volatility of past election days as you plan your risk heading into the close today.  If the morning gap holds to the open, keep in mind the DIA, SPY, and IWM will be testing significant price resistance levels.  Place your bets and roll the dice because anything is possible over the next 24 hours.  Adept day traders will have the upper hand as swing and position traders will find it nearly impossible to hold on to an edge. The question is, Do you feel Lucky?

Trade Wisely,

Doug