STTG Market Recap Oct 31, 2012

After being shut down for two days due to Sandy, stocks re-opened Wednesday to mixed results.   This was yet another session where markets opened near their highs yet sold off all those gains by the time noon hit.   The S&P 500 was up 0.02% while the NASDAQ fell 0.36%.  We continue to see the markets stall on the NASDAQ’s 200 day moving average while the S&P 500 remains in no man’s land after falling through support that was provided by April 2012’s highs early last week.

The only major economic news event was a weaker than expected Chicago Purchasing Managers index report.

Netflix (NFLX) was one name that stood out Wednesday as it was revelead activist Carl Icahn had built nearly a 10% stake in the company.

  • According to the filing, Icahn bought the shares because he finds them undervalued due to Netflix’s “dominant market position and international growth prospects.”  “Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile …,” Icahn reported in the filing.

In the wake of Sandy’s damage, a lot of “rebuilding” related stocks such as retailer’s Home Depot (HD) and Lowe’s (LOW) received attention, although this type of reaction is normally short lived in markets.

As we enter November, Bespoke Invest Premium shows us some interesting data on how the markets react to various patterns in election the past 100 years; of course the data set is relatively limited in nature but a Romney win would only be the second GOP challenger to push out a Democratic incumbant (Reagan over Carter in 1980 being the other).  But outside of that you can see the results as follows:

  • …the Dow has averaged a gain of 0.83% in November during election years over the last 100 years, which is slightly better than the average gain of 0.66% during all Novembers over the last 100 years. When a Democrat has won election, the Dow has averaged a decline of 0.69% in November, while the Dow has averaged a gain of 2.47% in November when a Republican has won. When the incumbent (either party) has won re-election, the Dow has averaged a gain of 1.30% in November.

Looking ahead to the shortened week, private payroll processor ADP will give their estimate of job creation Thursday and the official data will come Friday.

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