Sentiment Is Risk-Off Ahead Of U.S. Election

Posted Friday, October 30, 2020 by
Shain Vernier • 1 min read

We’re down to the final trading days ahead of Tuesday’s U.S. presidential election and things are heating up. Sentiment on Wall Street is “risk-off” as stocks are showing weakness. At the halfway point of the American session, the DJIA DOW (-280), S&P 500 SPX (-48), and NASDAQ (-260) are all in the red. Safe-havens are showing signs of life, with gold and the Japanese yen rallying vs the USD.

It’s been an active week on the U.S. economic calendar. Here’s a look at today’s key events:

Event                                                                          Actual               Projected         Previous

Core Personal Consumption (MoM, Sept.)              0.2%                   0.2%                  0.3%

Personal Consumption (MoM, Sept.)                        0.2%                    0.1%                  0.3%

Personal Spending (Sept.)                                           1.4%                    1.0%                  1.0%

In the aggregate, consumption and spending came in higher during September. Both are positive signs and indicate that the COVID-19 economic recovery continues to progress. In addition, the Michigan Consumer Sentiment Index (Oct.) came in at 81.8, above projections (81.2) and the previous release (81.2). Judging by today’s numbers, the American consumer is back in business.

For the time being, Tuesday’s election is the ultimate driver of participation in the markets. Let’s check out December E-mini DOW futures and see how the large caps are faring.

Election Uncertainty Dominates Market Sentiment

There may be no greater signal of uncertainty than a Doji candlestick pattern. And, that’s exactly what is setting up for the December E-mini DOW chart ― a daily Doji.

December E-mini DOW Futures (YM), Daily Chart

Overview: At press time, Real Clear Politics polling data has Joe Biden ahead by 7.8 points nationally. This figure is misleading, as the battleground states will ultimately determine Election 2020 and many are too-close-to-call. Right now, it appears that the Trump/Biden contest is a toss-up.

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