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Stocks Off To A Rough Start, Technical Support Eyed

Stocks got off to a rough start with all of the major indexes down yesterday on average of -2% or more. Tech was particularly weak and dragged the Nasdaq down by -2.78% by day's end.

The recount turmoil isn't helping any. But since the outcome of any uncalled election won't change the balance of power in the House or the Senate, the drama will have virtually no lasting impact on the market.

But word that the White House was drafting plans for a 25% tariff on imported cars unnerved the market. The President will meet with his trade team later today. It's unclear when a final decision will be made. But this is likely to be an issue for the market until then.

We also have upcoming trade talks with China at this month's G20 meeting.

So tariffs and trade will once again take center stage.

All that aside, I think the odds are high that the market put in a bottom a couple weeks ago.

Technically speaking, there's a gap left on the S&P chart from 10/30 at 2,685.43. That's only another -1.52% lower from here. I would expect plenty of new buyers to come in once that common gap is filled in.

In the meantime, expect more volatility.

But remember, as I mentioned before, the market typically goes up after the midterms. And over the last 72 years, and 18 midterm elections, the market has gone up on average of 17% in the 12 months following the midterms.

Add in the seasonally strong November and December months, and the odds get even better for higher prices to come.

So while the current tensions play out in the market, be sure you're putting your wish list together of your favorite stocks. Because, likely sooner rather later, the market will begin its next leg up.

And if you get into the right stocks, that could mean a lot more than just the average 17%, and instead a whole lot more.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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