How savvy traders are approaching the election

By Jani Ziedins | End of Day Analysis

Nov 07

Free After-Hours Analysis: 

The S&P 500 continued Friday’s late bounce on Monday as it added another 1%.

Economic headlines remain mostly the same as everyone looks forward to Tuesday’s elections. But for as much coverage as the election is getting, we shouldn’t expect Tuesday’s result to move the markets in a meaningful and lasting way. Partisan politics aside, stocks have rallied and fallen under Republicans just like they have under Democrats. Remember, we trade the market, not politics, so leave that Red and Blue stuff out of this. This economy rests in the Fed’s hands and it doesn’t matter who is in charge of Congress.

If the election were not happening Tuesday, I would be buying Friday’s rebound. But since we have an election on Tuesday, I’m buying Friday’s rebound. See what I did there? I trade the market, not politics, and right now the market is telling me it is time to buy the bounce, so that’s exactly what I doing.

Now, don’t get me wrong, I’m not saying the election will have zero impact on the market. No doubt we will get a knee-jerk bounce Wednesday morning following a “Red Wave” and prices will slip a little if we get a “Blue Wave”, but after that initial reflex of partisan volatility, expect the election to be old news by lunchtime.

I’m buying and adding to Friday’s rebound with stops spread around Friday’s intraday lows. If prices fall under my stops, I’m out. If the rally continues, I’m adding more and lifting my stops. Let other people second-guess the headlines.

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.