With just hours to go until the election (yes, we are FINALLY down to the final hours), many investors are super worried about how the market will react to the election results. And while I understand the angst, bigger picture, I would recommend you stop worrying about who will win the Presidency when it comes to the market and instead focus on earnings season to get a feel for the best stocks to buy moving forward.
For example, as noted by fellow Cabot Analyst Chris Preston recently:
In 2020, the S&P 500 was down 4.5% in the last two months before the election.
In 2016, the index tumbled 2.7% from mid-August through the November 8 election day.
In 2012, the peak came in mid-September, and for the next two months the S&P declined by more than 7.5%, with the bottom coming about 10 days after the election.
That’s three elections, three different party winners, three multi-month pullbacks by an average of nearly 5% in the months leading up to the election. And all three times, stocks quickly rebounded shortly after the election was settled, rising to new highs by the first week of January at the latest.
Essentially, historically the market does not care if a Republican is in office or a Democrat holds the big job. The market wants a winner, and then it will move on to focusing on the economy, interest rates, and individual companies that are performing well.
[text_ad]
While the market environment has been choppy as of late, which isn’t terribly surprising given the election drama, I have a growing list of earnings season winners from this quarter.
Third-Quarter Earnings Season Winners
Here is a look at some of those stocks that have reacted well to earnings in the last two weeks:
MS
PM
BX
GM
GOOG
SHAK
DLR
DECK
PRCT
ROOT
FFIV
RDDT
SFM
GEV
XPO
GRMN
PAYC
CVNA
That is quite a diverse list of stocks that have soared higher following reporting quarterly results, and to the old-school trader in me, that is a very bullish signal.
And what excites me even more about this list of stocks is that we are still early in earnings season, and that list will almost surely grow … which means Cabot Options Traders will have a wide list of stocks to buy from, as this has been a wildly successful strategy for the service over the years.
For example, in May Walmart (WMT) stock ripped higher following earnings, and in the days that followed, Cabot Options Traders bought a position. Fast forward to now, and WMT is trading nearly $20 higher from our buy level, and our calls are at a profit of approximately 300%.
Similarly, Oracle (ORCL) stock soared following an earnings beat in early September, Cabot Options Traders bought calls shortly afterwards, and since then the stock has busted out to a new high, and we have twice taken partial profits on our trade.
Essentially, I can’t wait for the election nonsense to pass, and then once the market has reacted, and then chilled out, Cabot Options Traders will get back to buying emerging earnings stars.
[author_ad]
