Wednesday, November 05, 2014

NASDAQ set to bounce on relief over the big Republican win

NASDAQ did a little of the consolidation thing on Tuesday, coupled with a little last minute anxiety over the looming election, so today should see a nice bounce for stocks in a "relief rally" now that the Republicans solidly secured their victories, with a clear Senate majority and a couple of governor wins that don't depend on runoffs or recounts. Nothing like a little certainty to boost the markets. We're also likely to see some short-covering for momentum stocks which tend to suffer outsize declines whenever consolidation occurs or buying enthusiasm wanes even modestly.
NASDAQ futures are up moderately sharply, indicating a nice pop at the open. It will be interesting to see how much the election results push fence-sitters to jump in and buy with vigor, or whether there are still plenty of cynics lined up to bet even more against the market that they insist is "overvalued."
The dust should finally be settling from the over-effects of the Fed meeting last week. The election rally should finally close the door on that episode. Jockeying over whether the first rate hike ("liftoff") will occur in March, June, or September will begin in earnest once the election euphoria fades, but that's months down the road.
There has been a fair amount of anxiety over quarterly results and weak guidance for the coming quarter, but I'm not so sure that wasn't really simply displaced anxiety over the election. Nonetheless, that anxiety has presented us longer-term investors will a fair number of buying opportunities. I picked up some more Priceline (PCLN), Twitter (TWTR), and Facebook (FB) on their sharp declines, and intend to pick up more FireEye (FEYE) and Pandora (P) today. Thank you, Wall Street, for these bargains!
-- Jack Krupansky


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