US Equities saw a strong start into the new week of trading with the Nasdaq Composite outperforming, seeing a gain of more than 2.5%.

Apple and Amazon stood out with impressive results. Amazon's recent gains could mainly have been driven by Prime Day, but the question is: can US tech equities continue to outperform and what could it mean for the upcoming US presidential election?

Technically and politically a favourable stock environment

As we pointed out in one of our latest blog articles, Amazon's bullish performance was to be expected given the stock's performance since the first Prime Day in 2015 and the two weeks leading up to the event, rising on average between 7 – 10%.

And while we are somehow a little sceptical in terms of further bullish performance in Amazon, and in tech stocks in general, given the very bullish performance after the first very weak two weeks of September, this time could it be different.

The technical picture for the Nasdaq100 is very positive, pointing to at least an attack at the current All Time Highs around 12,470 points. We will discuss this a little later in this article.

Also, incumbent US President Trump can be expected to do whatever is necessary to pump US Equities before the upcoming US election on the 03rd of November.

Why?

• When looking at the broader US Equity market, the S&P500 is up 7.3% since the 03rd of August, which was exactly three months before the US presidential election
• The tech sector plays a very important role in the S&P500, as does the FANGMAN combination, which accounts for around 25%, in terms of market capitalization
• Since 1928, a strong stock market has delivered a high likelihood for a win from the incumbent party (20 out of 23 times).
• An even more impressive fact: no president has ever lost an election with stocks up more than 7% in the three months leading up to the election (which has been the case in 1928, 1936 and 1940).

So, while we don't want to make a prediction of who will win the US presidential election, the path seems levelled for further gains in stocks in the 2 to 3 weeks ahead.

How can you trade the NQ100 CFD in this environment?

When looking at the daily time-frame one can clearly spot a sequence of higher highs and lows and the Nasdaq100 getting ready to initiate a progressive move, which has a projected target at around 12,600/650 USD.

Risk-reward-wise it seems difficult to trade a direct break higher with an initial stop at 10,670 at the September lows since such a setup only delivers a risk-reward ratio of 5 to 1, which is clearly not attractive.

Instead, and in anticipation of a move higher, we are looking for a correction down to 11,600 points and long engagements against this region, delivering a risk-reward ratio around 1:

Source: Admiral Markets MT5 with MT5SE Add-on NQ100 CFD daily chart (between June 13, 2019, to October 14, 2020). Accessed: October 14, 2020, at 10:00 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance

In 2015, the value of the NQ100 CFD increased by 7.8%, in 2016, it increased by 8.4%, in 2017, it increased by 30.5%, in 2018, it fell by 1.6%, and in 2019, it increased by 39.7%, meaning that in five years, it was up by 108.5%.