Ceremonial All-Time Highs During Election Season

Where did that rally come from?

I woke up this morning, and thought maybe I was looking at the Nasdaq futures and not the S&P 500 futures. I saw a 93 point rally underway and thought “That ain’t right!”.

Low and behold it was. Asian and European markets liked what they saw and they took off, and with it, the the US futures.

Previous two trading sessions the bulls had struggled with holding the breakout to new all time highs, and as I’ve mentioned before, when the market struggles to break through key resistance levels on the indices during regular trading hours, it will instead run the futures higher, often to absurd levels, so that price gaps well above the resistance and no longer has to deal with that challenge.

You don’t really see such deliberate behavior with individual equites, but in the index futures – ABSOLUTELY!

At the end of the day, you had a sell-off that created a near perfect doji candle, signifying indecision at those price levels by both the bulls and bears. In fact, the closing price was slightly lower than the open price.

Should we be surprised that this market is putting in all-time highs, when every thing around feels like it is falling apart?

Not at all!

It’s expected. Parties in power are going to leverage that power for their own political gain – unless you know, there’s a housing and banking collapse (2008) or some lab created disease released on all of humanity (2020). Otherwise, yeah, expect all-time highs in the height of election season. During 2000’s Dot Com bubble we had already started pulling back off the highs, but most weren’t aware of the ultimate sell-off that was still yet to come – and that didn’t happen until after the election.

How did I fare?

For me, I booked profits of 3.3% in DR Horton (DHI) – as I didn’t want to put to chance my gains with Lennar (LEN) reporting after the bell, and for the past year they have done nothing but disappoint and drag DHI down with it. Once again they managed to disappoint and do exactly that. Fortunately, I don’t have to deal with that tomorrow.  I also added some exposure in semis, but on the whole, my overall exposure in the market remained unchanged from the day before. I also managed to book some of my gains in TransUnion (TRU) for a +7.4% profit.

So overall, yeah, it was pretty decent day .

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Hope to see you in there!