The markets are coiling and compressing as they process jarring events and political suspense, with potential energy building up for eventual release.

The stock market has been vibrating within a tight range for a month, an agitated stasis that was not disturbed last week by news of President Donald Trump’s illness or the swings in perceived likelihood of a new 13-figure fiscal support deal.

The S&P 500 has been corralled 3,200 to 3,400 for four weeks. Twice last week, overnight index futures twitched lower on headline triggers, after the presidential debate and Trump’s positive Covid test, and each time they bounced from around 3,300.

Rallies have become stuck around the index’s 50-day average (now around 3,360, less than half a percent above Friday’s close). Bespoke Investment Group calls this “a classic sign of a coiling market, and the fact that the S&P 500 recently broke up and out of a bull flag formation would suggest that the resolution will be higher when the breakout comes.”

It’s a cliche that “markets hate uncertainty,” but this is both redundant and incomplete. Uncertainty is the essential state of the world, whether it’s obvious or not. When many important uncertainties are on the surface and are being debated and fretted over constantly, they have a lower capacity to shock and drive a major market re-pricing.

Plan A : Short if market failed to support above 3363. Targets are 3339, 3315 and 3289.

Plan B : Long if market retraced but supported firm above 3363. Targets are 3381, 3405 and 3425.

U.S. stocks climbed on Monday after President Donald Trump said he will be discharged from the hospital Monday evening, easing concerns about more political uncertainty ahead of Election Day.

Investors also grew more hopeful that lawmakers would reach a compromise on a new stimulus deal. Trump’s illness, as well as a weak September jobs report, highlighted the urgency for further coronavirus aid after a months-long stalemate in Washington.

The Dow Jones Industrial Average climbed 465.83 points, or 1.7%, to 28,148.64. The S&P 500 rose 1.8%, or 60.18 points, to 3,408.62, while the Nasdaq Composite gained 2.3%, or 257.47 points, to 11,332.49.

Stocks jumped to their session highs after Trump said in an afternoon tweet that he will be leaving Walter Reed National Military Medical Center at 6:30 p.m. ET, just three days after he entered the hospital to be treated for coronavirus.

Optimism for reaching a compromise rose recently after Pelosi said Trump’s diagnosis could change the dynamic of talks toward an agreement. Pelosi on Friday called on the airline industry to delay furloughs, saying additional relief for the industry is “imminent.”

Plan B : Short if market failed to support above 11405. Targets are 11360, 11329 and 11281.
 

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Disclaimer: This information is intended to assist professional investors. News are credit courtesy of Reuters, Nasdaq.com, Bloomberg, CNN, Market Watch, FT.com, the Star online, forbes.com, mining.com and CNBC. The information does not constitute investment advice or an offer to invest or to provide management services and is subject to correction, completion and amendment without notice.As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment.