The market recovered from small early losses to finish in positive territory leading into tomorrow's presidential election. The Nasdaq was the strongest index, gaining 0.6%. After Friday's outside bearish reversal, we saw some selling pressure in the morning today, but the recent floor on the S&P of 1403-1408 continues to remain intact. It feels like the market is on hold ahead of the election and as we continue to get news about the economic effects of Hurricane Sandy.
Many are trying to handicap what stocks will do well based on whether Romney or Obama win, but we will wait to let the price action dictate our next moves in the market. At this point, I think the most important thing is that after tomorrow night we have an elected president, and we will not allow the election to drag out the way Bush vs. Gore did.
At some point, this range will resolve, but as technical traders, we will wait for that to happen before placing big direction bets. You can use relative strength rules to trade stocks; however, at this stage, we are favoring a short-term tactical approach over a multi-position swing trading approach.
Another thing to note is the Nasdaq ETF (NASDAQ:QQQ), which had led us lower over the last few weeks and is now hanging onto its 200-day moving average by a thread. The QQQ must continue to hold that major level or else it could lead to more downside. The longer QQQ stays below $66.30-66.60, the higher probability is that the sector gets another leg to the downside.
Apple (NASDAQ:AAPL) began its road to recovery after Friday's sharp sell-off, gaining back 1.4% after revealing three million newest-generation iPads have been sold in the last three days. The new iPad mini was at first looked upon with skepticism, but demand has so far been healthy.
Netflix (NASDAQ:NFLX) once again returned to its winning ways, adding 1.7% upon news that the company was creating a "poison pill" provision in order to fend off any potential hostile takeover. The move comes in response to Carl Icahn's purchase of a 10% stake in the company last week. If nothing else, NFLX is benefiting from the fact that people are fighting to wrest ownership of its shares.