Solid Companies Are Outperforming As Washout Lows Capture Bargain Hunters Attention Into the MId-Term Elections
Bargain hunters and institutions continue buying solid companies into the washout lows. The HiLo percent reached (-5%) last week finishing (+150%) higher on Monday with a close above 15%.
HiLo Percent Washout Lows
The August 2015 “death cross” led to an eventual decline of (-20.58%) before stocks were sufficiently sold off. Washout lows prompted bargain hunters at that time, just as they are now. Solid companies are being vacuumed up.
The NYSE is now at this same level at the washout lows in February 2015. If institutions continue to buy solid companies with superior sales and earnings, we will know. The volume will begin pickup. Support levels along the 38.2% Fibonacci zone will hold. Bargain hunters will add to positions.
There have been 18 midterm elections since WWII. Statistically speaking, the equity markets (stocks) were higher in the12 months that followed. In other word, equities win loss ratio was 18 for 18. No matter what political combination an investor considered, whether Congress or the White House, markets finished higher a year later.
Post Mid-term Elections 18 for 18
Mid-term elections aside, traders and investors are presented with what to buy afterward. Most professional money managers suggest buying financials, health-care, beaten down technology and select energy names regardless of today’s midterm election results. Defense spending would likely be curtailed if the Democrats win the house.
We will be watching with a cautiously optimistic perspective, as outlined over the past couple of weeks. The weekend video newsletter goes into specifics.
Futures are flat to slightly negative this morning.
Join us during our LIVESTREAM broadcast during market hours to discuss these issues and more. Watch, listen and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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