What to watch today
First off S&P500 futures are running up into resistance.
The VIX remains elevated.
and still very close to that key 20 level.
Every spike higher in the VIX has been short lived and over time the 'fear' subsides and the stock market resumes its climb higher. Will this time be different?
Today is election day and the brunt of the most recent pull back occurred after the FBI re-opened an investigation into one of the Presidential hopefuls just days away from the election. This was unprecedented and uncertainty spiked higher bringing prices lower.
Yesterdays furious rally has turned momentum. While the 2% move could be seen as too sharp, and the market needs some time to digest it. Historically strong momentum begets more strong momentum. Don't be suprised if this move continues to the upside.
Others were writing the same long winded articles about just how overvalued this market is and how it could collapse 25% at any time. Which is the same perspective they've had for almost then entirety of this bull market.
For those of us who don't merely write endless bearish pieces on the market hoping one of them will finally stick, this bull market has been anything but a myth. You can skew your market perspective any way you like, but one thing you can't skew is the reality of the stock market. And the reality is we just experienced a tremendous bull market, built on the backs of those who think its a myth. Those who have been wrong about it, as long as they live to keep writing their same failed perspective, will get it right at some point. Because markets do go up and down.
Let's continue to watch the VIX, VXX, IWM, and S&P500 futures. As I highlighted last week small caps started the decline for the market a few weeks ago. On Friday IWM outperformed and gave a glimpse into what may lie ahead. We could see it come up to the $120 level, a key line in the sand, before taking a break.
and yes.... we have the election today. Back in 2008 the market rallied over 200 points on election day. The next day the market fell over 200 points. I'm not sure we will see a similar reaction. But until we get the final numbers, uncertainty will remain high.
A final result should take a lot of uncertainty out of the market tomorrow.