Sold on Uncertainty, Bought on Certainty: The S&P Gaps Back Into the Range

Post mid terms and the market has some sense of certainty, perhaps we can just go straight up now for the next several weeks until the new year?

Maybe!

Uncertainty was pronounced dead at 06:26 UTC. Markets sent flowers and a gap up.

Anyway, pre news markets sold off on uncertainty and post news the market rallied on certainty, just like they always do around these types of events.

Scroll down for the S&P back in its range, my deflating VIX trade, crude, Bitcoin, and a fresh Double Dip on the biotech.

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Market Snapshot

• S&P 500 futures: 7,649.75, +0.53%
• Uncle Dow futures: 52,472, +1.28%
• NazQuack futures: 28,468.50
• Uncle Russ futures: 2,859.0, +1.32%
• Gold futures: 4,053.6, +2.88%
• Crude oil: 95.91, -0.88%
• VIX: 18.53, -11%
• Bitcoin: 78,266

The midterms, decided. The Democrats won the Senate and the House overnight. AP reported Senate control at 04:40 UTC and called the House at 06:26 UTC. By its count at 06:30 UTC, Democrats had flipped 7 Senate seats and 16 House seats, with no Republican pickups. Republicans had held the Senate 53 to 47 and the House 218 to 214. In Texas, James Talarico beat Ken Paxton; in Ohio, Sherrod Brown beat Senator Jon Husted. The result means divided government from January, with a Republican President and a Democratic Congress.

SPX – Gapping open post mid terms, back into the range.

Since I’ve been typing the S&P has moved from +50 to +80 and is steadily chugging along off the range support lows we’ve been monitoring.

Looking at the clean SPX chart again, you can see price jumping back into the prior range after a little yo-yo’ing, just like it did back in mid Sept.

A clean move to the range highs would be expected.

VIX – Deflating, which is good for me.

Somewhere a man is letting the bouncy castle down at 5pm, children still on it.

My VIX trade is deflating, which is good for me, as the bloated fear is now being sucked out for the mean reversion trade.

VIX has another point to move and I can cash out.

Crude Oil – Looking a little messy.

Crude oil is now looking a little messy and below the prior range highs at $96.

I remain bearish, looking for a push to the $89 level.

Bitcoin – Perhaps this will be the low.

Prior range lows support, channel lows (again). 76,000/75,000 is the zone to punch through for the bears and the bulls to defend.

Bitcoin is turning off the range lows also, perhaps this will be the low, and we can have a late Up’tober, Novemb’boom?*

*Failing that, Decemb’brrr.

Double Dip – Shallow dips looking interesting.

The Double Dip is showing me a new shallow dip setup on XBI, the biotech. It’s a new setup, trading at the opening bell.

There are a few other ETFs looking promising, but as I like and intend to trade via options it’s a little frustrating to find a solid liquid list. I’m whittling away slowly.

I’m basically looking for ETFs with liquid options that I can trade. Some ETFs look great on the test but don’t have options for me to trade. If it’s off the short list, it gets moved to another list, as it’s still good to trade, just not with options.

The XBI shallow pullback backtest, Feb 2006 to 3 Nov 2026: 261 trades, 151 winners (57.85%), a profit factor of 1.562, a total P&L of +$15,401.27 (+1.54%) and a max drawdown of $3,325.59 (0.33%).

Shallow dips looking interesting and the long term curve looks promising, not the best one I’ve seen out of my little ETF universe, but nonetheless steady as she goes!