5 Trades to Take After the "Obama Crash"
BALTIMORE (Stockpickr) -- I guess Mr. Market voted Romney.
Stocks got gut punched in yesterday's post-election market session, the Dow Jones Industrial Average and the S&P 500 both falling more than 2.3% to mark the worst single day for stocks of 2012. But that shouldn't have come as a huge surprise -- market selloffs are historically pretty common after presidential elections, especially when stocks are already out of favor with investors.
According to data compiled by Bespoke Investment Group, yesterday's selloff ranked the fifth-worst one-day reaction in the Dow to a presidential election. But looking at the data a little bit closer, and some interesting patterns emerge. For starters, each of the other four biggest post-election drops happened when a Democrat was voted in, and maybe more importantly, each time was followed up by stellar stock performance over that president's term.
In fact, buying the Dow after the drop day, and holding until Election Day four years later would have generated average annual gains of 15.04% -- more than twice what the Dow averaged over that time period. No matter who you voted for on Tuesday, that's a pretty good reason to feel better about stocks.
That's why we're taking a technical look at five big names that are tradable this week.
If you're new to technical analysis, here's the executive summary.
Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.
Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at the charts of five high-volume stocks to trade for gains.