Market Recap - Romney Bounce?

Romney Bounce 
Was the stock market bounce during the last three hours of trading driven by something more than just late day buying? Or was it the fact that traders were betting on a Romney victory tomorrow to push stocks higher? Honestly, it was probably a few traders betting on Romney, but with such low volume the market can be moved easily. We will know more about what the market thinks during tomorrow's trading session. Regardless of who you are voting for, stocks would prefer a more "market friendly" Romney in the short-term.

S&P Holding Support
The  S&P 500 continues to hold support above the 1400 area with a low today of 1408 before bouncing and closing at 1417, up 3 points. Tomorrow will likely see more below average volume as traders wait for the announcement of the leader of the free world for the next 4 years. As long as the index can continue to trade above support the longer term uptrend remains intact and investors need to be leaning heavily to the bullish side.

Utilities Not Holding Support
One sector that has been lagging the overall market and is breaking through support is the Utilities. The SPDR Utilities ETF (XLU) was down 1.6% today is trading that the lowest level in 5 months. Even though the ETF offers an attractive dividend yield of 3.6%, the high valuation (for utilities) is too much for investors to ignore. There is also the fact investors are willing to take more risk today than they were last year and will prefer avoid the "safe" sectors such as utilities and consumer staples. I will continue to underweight the sector for the near future.

Falling Oil Good for Airlines
The price of oil bounced 1% today, but this is after falling about 15% in the last 6 weeks. This is good for anyone filling up their tanks (that is assuming you can get gas in the Northeast) and especially the airlines. Even Superstorm Sandy could not hold back the Airline stocks. Today the Guggenheim Airline ETF (FAA) gained 1.0% and is closing in on a 4-month high. We recommended buying FAA in our ETF Bulletin newsletter for subscribers in late September and the ETF is up 5% since that email alert.

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