The last few weeks have seen selling come into stocks as traders exited positions ahead of the election. This morning we are seeing some bullish action on voting day, with the S&P futures trading up over 1%.
October brought a lot of negativity surrounding the idea of a contested election. With that fear seemingly priced in, the bulls are buying today as polling is giving a bit more confidence that we will know a result by tomorrow. The market wants clarity more than a particular candidate and any uncertainty on the results will be a negative for stocks.
Futures trading should be active tonight, but nothing like 2016 as there is no surprise factor that would shock the markets. Traders tonight might be looking past a presidential winner and focusing on the potential of a “Blue Wave’, which could be taken as a net negative. If the Senate turns, it will be perceived that higher taxes would be easier to push through congress with a Democratic President and Congress. At the same time, a massive stimulus could be expected and certain sectors could be big benefactors.
S&P Futures Trading Levels
The S&P futures currently sit at 3340, which is ten handles below the overnight high.
Support levels for the day will be 3330 and 3290.
Upside resistance is 3370 and 3400.
The current S&P trading environment is trending lower. The 50-day MA for the S&P 500 is at 3400, which should be a line in the sand for the bears. A move above this level after the election would be a bullish signal.
Three Stocks to Watch
PYPL- PayPal beat on both the top and bottom lines, seeing Q3 at $1.07 v the $0.94 expected. Active accounts were up 55% year over year and Venmo Total Payment Volume (TPV) was up 61% year over year.
The company saw record growth in payment transactions, but the lack of 2021 guidance has the stock lower. The stock is trading down 5% in the premarket and is off 18% from its all-time highs. The 200-day MA is $154.
W- Big bottom line beat from Wayfair, who was out this morning with Q3 earnings of $2.30 v the $0.84 expected. Active customers were up 51% year over year and orders delivered were up 73%.
The stock is trading up over 10% in the premarket.
ANET– Arista Networks is trading up over 12% premarket after a top and bottom-line beat. The company also guided Q4 higher, which has the stock trading at its highest levels since August.
The stock has broken technical resistance and the earnings turnaround will build the bullish case for the stock to head back to 2020 highs at $277.
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