Can it really be possible that the person who wins the election will dictate the direction for the economy over the next four years? Will they truly make the right decisions relative to the fiscal cliff facing the US? And how much impact will they really have over the direction or outcome of the stock market? If I say no or there is less impact than many attribute there will be an avalanche of emails telling otherwise. If I say yes, I will get all the reason one candidate is a better selection than the other. Thus, we all will watch today as the election process takes place to put one of two individuals in the White House to set all of this in motion. Yes, they will have an influence on the economy, the budget, and even to some degree, which sectors are benefactors of all the governments spending. But, the reality lies in what is ahead, and how we all react to the circumstances we face, both good and bad relative to the economic picture. Voting in America is a privilege… please exercise your privilege and cast your ballot.
Will Greece step back onto center stage in the European saga? Last week stocks in Greece (GREK) fell nearly 17 percent on worries about the austerity vote on November 7th. Over the weekend the Prime Minister warned that a vote against approval of the measures would result in a withdrawal from the European Union and the euro. This is a major issue facing both Greece and the EU. There have not been many headlines relative to this issue and the reality is it could have a major impact on the capital markets. For now it doesn’t seem to be worthy of attention by the media and other financial analyst, but it is something to watch as we move forward this week.
November 12th the EU finance ministers will meet and make a decision on further lending to bailout Greece. Thus, the importance of the November vote in Greece relative to the austerity programs. Europe has been under pressure as well. The Chart of IEV, iShares Europe 350 ETF is sitting on the 200 day moving average as support and the weakness in the sector has been evident over the last month. The response and ripple effect of the current situation in Greece is worth tracking near term.
Apple stated they sold 3 million new iPad Minis over the weekend, good or not? It did give some analyst hope of a stronger holiday season for the company. The stock closed at $584 or up 1.3 percent on the news Monday. The stock has been steadily selling since the September high near $702. Is there room for a bounce at these levels? Support remains at the $577 mark for now. This is a stock that has been able to do no wrong and it is down 18 percent. The bearish 20% mark could signal an end to the run, but first watch to see if there is a move off support. If not, the downside may accelerate further. The stock will put pressure on the NASDAQ 100 index and technology sector as well.
Technology (XLK)stocks bounced nicely last Thursday, but failed to follow through on Friday. In fact, the selling pushed the index back to the level of Wednesday’s close. The need for some leadership from the sector is obvious in reviewing the broad index. Weakness is the healthcare, energy and basic material sectors have been a drag on the index overall. A shift back towards a willingness to accept risk by investors is key to the sector contributing to the overall leadership of the broad index. Semiconductor (SOXX) stocks need to clear the 381 level on the SOX index to help. The networking (IGN) and internet (FDN) stocks continue to hold onto moves off support. Software is the only sub-sector not advancing currently. This remains a indicator for the broad markets short term on direction.
Today promises to be a loud day relative to the election. The pontification of what it all means will be endless. For me the key is an orderly election process with a clear winner stated by late tonight or early tomorrow morning. Either way America has some big hurdles to jump in order to put our economy and our leadership back in the right direction.