Presidential Election and Coronavirus continue to weigh on Investors

A mixed market yesterday with large-cap tech leading the Nasdaq higher. The election is a major factor for many of those participating in the stock market. Earnings continue to roll out, but the focus remains on who wins the election. Odds point for one candidate over another, but as we saw in 2016 sometimes polls are incorrect. All we know is what we can determine from the stock market price action. Looking at the NASDAQ Composite index we see a nice consolidation area above the 50-day moving average. A positive development for those who are bullish on the stock market. Small caps are experiencing a similar situation and like the Nasdaq is a positive development. This does not mean we are picking a winner for the presidential election. We are simply interpreting the price action and so far, it is a positive for the bulls. No need to take on unnecessary risk given the uncertainty surrounding the election results.

While we hope a resolution to the election should end quickly COVID-19 continues to be a nuisance. As we battle the pandemic and case counts rising many are nervous of how the virus will impact the economy for the immediate future. Crude oil is back below $40 a barrel as future demand looks to be lower as lockdowns may come. As we aren’t predictors of presidential elections, we are not public health experts either. Our job as traders is to maximize our profit potential through a robust trading system including a proper risk management process. This is how we maximize our earning potential. Our opinions do not matter at all. This fact needs to be clear to be successful in this trading environment. No matter what you think may happen throw it in the trash can. Play the odds and ignore the noise.

A few earnings to be aware of are AAPL, AMZN, GOOGL, and TEAM reporting tomorrow after the market close. A big day with a few of the largest NASDAQ stocks reporting should provide the market pundits with something to chew on. As these large stocks go they will pull the general market with them. AAPL and AAPL are interesting here even though they are mega-cap stocks. Fund managers continue to flock to large-cap technology stocks as a safe haven. The Dow Jones Industrials average has been replaced as the fail-safe group for fund managers.

We must continue to grind out our process and find opportunities to win. Stay disciplined.