04Nov10:21 amEST

Divided We Stand

The biggest takeaway from the (ongoing) election is that we are looking at divided government as the expected "Blue Wave" (nor the proposed "Red Wave," at one point) materialized in Congress. Regardless of whether Biden or Trump wins the White House anytime soon, the Senate will (very likely) remain Republican with the House staying Democratic and the longtime duo or Mitch McConnell and Nancy Pelosi, respectively, continuing to operate as arguably the two most important individual inside the Beltway. 

With divided government, the likelihood of imminent, aggressive capital gains taxes increased or an assault on the mega cap tech oligarchy "FANG" names seems much less likely. A Green New Deal also becomes much tougher to envision anytime soon, as well, as solar stocks lag this morning. Moreover, the firearms plays, RGR SWBI, are sharply lower most likely due to the Second Amendment proponents assuming they have the Senate and Supreme Court still firmly in their favor regardless of who occupies the White House over the next four years. 

But the gridlock has its drawbacks, too, especially during a pandemic.

Many Americans are still in a tough spot and need another stimulus package. If, for example, we see a lame duck Trump, does anyone really think everyone in Washington will now hold hands to pass a new, large stimulus and sing, "Kumbaya," given how hotly contested and potentially controversial the current election is?

As a result, plays like X in steels and USCR sold off sharply this morning. 

The silver lining is that these are all knee-jerk reactions to an emotionally-charged overnight event. Most market players and pundits are running on less-than-ideal sleep, which should add even more to the emotions of the moment. Thus, my play is to let the dust settle and look for some spots to get back involved, albeit with the FOMC tomorrow. 

One area which has my eye here: Virus testing and therapeutic plays again: ABT CODX OPK REGN. 

Dude, Where's My Ballot Init... Election Rotations 11/04/20 ...


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