As we edge closer to the upcoming election, it’s clear the markets are holding their breath — and for good reason.
Historically, election cycles create a unique atmosphere in the market where institutional investors and big money managers remain cautious, hesitant to commit significant capital without knowing the political landscape ahead.
This translates to a lack of momentum and restrained trading activity, keeping us locked in a tight range.
For the past several months, we’ve seen this indecision on full display as the S&P 500 (SPY) has been largely range-bound. And until we get clarity on the election results, this pattern likely won’t change. With less than two weeks until Election Day, we’re watching the market oscillate between support and resistance levels.
Currently, the box we’re in seems to extend from around $570 to around $590 in the SPY. Barring any unexpected disruptions, we’re likely to stay within this range leading into November.
While major earnings from big players like Google parent Alphabet (GOOG; GOOGL), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Meta (META) are on the horizon, they may not have enough influence to move the entire market out of this range.
Unless we see uniformly strong or weak performance across the board, the election narrative will continue to dominate. In this environment, traders might be tempted to bet on market direction based on expected earnings results, but it’s essential to remember that political uncertainty creates a unique form of resistance — one that even impressive earnings reports might struggle to overcome.
Interestingly, once the election results are in, we may not see a dramatic immediate shift in market direction.
Instead, the results could act more as a release valve, removing a primary source of indecision and giving the market permission to move more freely. This doesn’t guarantee an explosive rally or sell-off post-election, but it does open the door for a broader range and less constraint.
Adding another layer of intrigue, we have the dollar continuing to show strength alongside a bond market in limbo. With Treasuries under pressure, the question remains: Where is the capital going?
A good portion appears to have flowed into safe-haven assets like gold, which has seen notable strength lately. If bonds continue to show weakness, there’s a chance that gold prices could climb even higher as more investors look for stability outside traditional fixed income.
Looking ahead, expect the market to continue its back-and-forth grind within the current range until Election Day. It’s a period of “wait and see” as traders and institutions weigh their next steps carefully.
While tempting to dive in, this is a time for caution and selective positioning. Once the dust settles, we’ll have a better read on how the market will move — and the opportunity to make informed trades in a more decisive market environment.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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These Bars Could Set Off a Flurry of New Buys
The performances displayed here are historical examples based on Newton signals for the time period shown. They are not indicative of future results and you may lose money. Based on our backtesting Newton signals posted a positive outcome 80% of the time.
