Election Day Market Breakout: What’s Next?

The stock market breakout erupted with bullish energy on Election Day, echoing patterns seen in past elections. Notably, when President Biden won, the market gained approximately 2%, and there was a similar surge during President Trump’s victory. This year, the market was up a significant 2.62%, releasing some of the uncertainty and fueling a full-blown breakout mode.

Key Market Index Analysis:

• QQQ: The tech-heavy QQQ surged, marking a breakout that traders must respect regardless of political outcomes. This breakout is significant, showing renewed market momentum.
• SPY: Following suit, the SPY also demonstrated a breakout, reinforcing broad market strength.
• IWM (Russell 2000): Perhaps the most notable move, the IWM jumped a staggering 5.58%. This index has been trapped in a range for what feels like an eternity, making this breakout a potential game-changer. Despite interest rates rising and bond funds like TLT and the 10-year note taking hits, the IWM’s move shows strength even in the face of traditionally bearish signals.

Outlook for Tomorrow: The current trend indicates that the IWM may target the 242 level next. While a dip to fill some of the gap is possible after such a massive move, the overall sentiment remains bullish. As traders, it’s essential to respect the breakout and adapt if the price action shifts.

Top Watch List for Day Trading:

1. Coinbase (COIN): Displayed incredible strength today with massive volume and consistent 9 EMA support. A weak open tomorrow could set up a red-to-green move.
2. Lyft (LYFT): Posted strong earnings and upbeat guidance, positioning itself for a continued move towards the $21 breakout zone. A pullback at the open could present a prime buying opportunity.
3. Cleanspark (CLSK): A crypto name showing potential to follow COIN’s lead, testing resistance levels and poised for a move.
4. Wolf (WULF): Breaking out near the $7 level. Watch for a weak open and red-to-green setup.
5. Luminar Technologies (LAZR) and Lumentum (LITE): Both on watch for follow-through after today’s alerts.
6. SMR: A nuclear energy stock pulling back into support. Recent political discussions around energy could keep this in play.
7. Block (SQ): Earnings due, with a huge potential breakout level at $60. Keep this on radar for post-earnings action.
8. Upstart (UPST): Another earnings name with a pivotal resistance zone at $58. Watch for a breakout or consolidation post-earnings.
9. Netflix (NFLX): A textbook high-tight flag breakout today. Look for continuation on a weak open.
10. Amazon (AMZN): Cleared major resistance at $200, absorbing heavy selling pressure. This could be a swing trade candidate if it holds above $200.

Final Thoughts: While the market is buzzing with bullish sentiment, keep your watch list tiered. Tier 1 should include immediate setups ready for action, while Tier 2 holds promising plays needing a day or two to set up. Stay adaptable, trade the price action, and be prepared for volatility.

Go Detroit Lions!

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