Market volatility due to the presidential election!

In the last few weeks, the most frequent discussion has been about the risk of volatility in connection with the upcoming presidential election in the US. Of course, the market will not be reassured by the determination of both Donald Trump and Joe Biden to contest the outcome of the election in the event of a loss. We can therefore expect that the week after November 3 could be stormy as well.

Historically, however, the stock market is usually quite cheerful after presidential elections. Moreover, investor sentiment may also be boosted by the long-awaited second fiscal aid package for the US economy later this year or in early 2021.

Analysts at Ned Davis Research add a bit of technically-based optimism. "The S&P 500 index has added 45% in the six months since March 23, and firmed another 8% through October 14, when 90% of the titles included in the index strengthened. Such broad-based growth promises further gains over a longer period. For long-term investors (rather than short-term traders and market timers), therefore, there should be room for a continuation of the bull trend into 2021.

As of mid-October, there were 94 stocks in the S&P 500 that had at least 75% buy recommendations from Wall Street analysts (according to FactSet). Among Wall Street's favorites are shares of energy companies. For 2021, the market expects higher oil prices. 

Of the 25 selected titles with the greatest price appreciation potential (according to analyst price targets), 10 are in the energy sector.

The remaining 15 companies include some big names, such as Citigroup, CVS Health, GM and Micron Technology. While the data is not completely up-to-date, both tables serve very well as inspiration for election week.

Source: www.investicniweb.cz