| Stocks Soar Again On Strong Economic Data And Hopes For More Stimulus  Image: Bigstock Stocks soared again yesterday, building on Friday's gains as the market continues to rebound from last week's correction lows.
The Dow and the S&P both closed at their 50-day moving average after poking thru it earlier in the day. The Nasdaq however pushed thru its 50-day and closed above it.
There's still an overhead gap on the S&P chart at 3,384.45 that will likely be a target the market tries to fill. But the Dow and the Nasdaq both filled their overhead gaps yesterday.
Interestingly, all of the major indexes now have gaps underneath them (due to the gap higher open yesterday).
The reason why I mention these gaps is because common gaps are usually filled. Not always. And even when they are filled, it can sometimes take a while.
Overhead gaps act as resistance (until a definitive close above it), and gaps underneath act as support (until a definitive close below it).
The longer that gap stays open and the further the market gets away from it, the less important they become to the immediate outlook, until such a time when an upside breakout, or downside correction is seen. Then those areas become reference points once again and act as support and resistance.
In other news, there's more buzz about the potential for a fifth coronavirus relief/stimulus package. It was reported last week that the Treasury Secretary and the Speaker of the House would likely resume negotiations sometime this week. Even though talks broke down last month, there's bipartisan interest in trying to get something done before the election. Whether anything comes to fruition remains to be seen. But the mere fact they are willing to talk is encouraging given the acrimony surrounding the failed negotiations last time.
The market also likely took note of comments by Goldman Sachs which said the fear of a delayed election result is overblown. According to Michael Cahill and Alec Phillips, "it seems fairly likely that there should be enough information on election night from states that will report results quickly for the market to be able to gauge the likely winner." "In other words, the S&P can trade the likely outcome, even if the AP does not call the race."
They went on to say that, "while we recognize that an especially uncertain election outcome could have a significant negative impact on risk sentiment, we think this outcome is less likely than current market pricing, and client conversations, seem to imply."
Let me also add that the last time we had a contested election was back in 2000 between Bush and Gore. That lasted for 36 days before a winner was declared. And during that time, the S&P lost just -4.24%. Hardly the end of the world.
In the meantime, the market has surged higher in the last two days, and everybody will be watching to see if the markets can build upon recent gains even further.
Remember, with expectations for unprecedented growth for the remainder of the year, the market could see the same by year's end as well.
So make sure you're taking full advantage of it.
See you tomorrow, 
Kevin Matras Executive Vice President, Zacks Investment Research | Most Popular Articles from Zacks.com | 
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