Wednesday, November 07, 2012

Market Jeers Election Results

Markets in the US are down sharply pretty much across the board following last nights presidential election.  As for this post, the Dow is down 300 points, although it is still early in the session so its possible we could recoup some of this decline into the close.  Let's hope.

Sectors that were perceived to benefit under a Romney administration are getting hit hard today.  Coal stocks are down sharply (KOL), and financials stocks (XLF) are also down more than the other sectors today.  Interestingly, consumer discretionary stocks (XLY) are down the least.

Commodities are also getting hit hard, and the dollar is higher.  Oil prices are down more than $3 to $85.15.  Even gold prices are lower near $1710 despite the perception that Obama will reappoint Bernanke and easy monetary policy should be supportive to gold prices.

Stocks rising on earnings: SODA, M, THC, HFC

Stocks falling on earnings: WLP, DVN, PRGO, TAP, AGU

Overnight Asian markets were mixed following the US election.  China was flat and now turns its attention to the handoff in leadership in their country.

In Europe, the euro is lower today and European markets are lower on slowing economic data.  Spain and Germany reported disappointing industrial production numbers.  Also, Greece is set to vote on austerity measures today which need to pass in order for the troubled country to receive its next tranche of financial aid.

The 10-year yield is sharply lower today falling back to 1.63%.  And the VIX is moving higher.  It had a bit of a delayed reaction this morning, but is now up more than 10% to 19.35 as the selling in the markets intensifies.

Trading comment: The market is having a decidedly negative reaction to the election results last night.  I don't think it will last too long, but our job is to trade the market in front of us and not invest based on hope.  The S&P 500 has broken below recent support at the 1400 level.  The mid-cap index has turned tail and broken back below its 50-day moving average.  So caution is warranted until we see signs that the selling pressure is abating.  So far, the SPX is about -5.5% off its recent highs.  So we could see further declines in this current correction.  Corrections don't usually reverse overnight.  It takes some time to build a new base from which the market can launch its next rally.  So be patient, but also defensive in the meantime. 


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