The midterm election is over.
As I predicted, it was a “buy the news” event, as investors collectively celebrated the end of pre-election uncertainty.
Red, blue, split, it doesn’t matter. The market wants to know what’s going on. And now we have a direction…
How I’m trading the post-election market.
On Monday, November 2, I sent this alert to traders at 3:05 P.M. ET:
“BUY SPY 11/4/26 SPY 760 CALLS TARGET 773 BY WEDNESDAY”
Sure enough, on Wednesday morning the S&P 500 shot above $773 per share.
Now that the election is over, the market can get back to doing what it does best…
Giving us volatile trade setups.
The Biggest Election Surprises
Most analysts expected Democrats to win the House.
But the size of the win caught Wall Street off guard.
Democrats took control of both the House and the Senate, flipping at least seven Senate seats. For reference, both chambers have changed hands in the same cycle only twice in the last 50 years.
Some of the biggest upsets came in traditional Republican strongholds.
In Texas, Democrats won a statewide race for the first time since 1994. Kansas and South Carolina delivered surprises too.
By late morning on Wednesday, the Dow was up more than 1,200 points, or 2.4%, on pace for its best day since April. Additionally, Treasury yields fell as traders bet that a divided government would keep a lid on federal spending.
Gridlock means fewer surprises from Washington. And the market loves predictability.
History supports that claim. Since 1874, a divided government under a Republican president has resulted from 14 midterms. And in the 12 months after those elections, the S&P 500 gained an average of 18%. It finished higher 93% of the time.
Under the hood, the results created clear short-term winners and losers…
- Clean energy jumped. First Solar rose 9.4% and Sunrun gained 10% in premarket trading.
- Defense slipped. Northrop Grumman fell 5% on fears that the $1.5 trillion defense budget request could come in short.
- AI data centers wobbled. Core Scientific and CoreWeave dipped on concerns about more congressional oversight of the AI buildout.
This is all good information.
Remember, for trading, we don’t care whether the government swings red or blue. We just need a clear idea of the road ahead.
That’s exactly what we got.
(Join me on Mondays for more of my expert analysis. Follow the link below.)
My Top Trade Setup
Before the election, investors were nervous that a democratic win would cause the AI buildout to stall.
That’s still a significant possibility. But it’s unlikely the buildout stalls completely. Especially since estimates for global AI spending in 2027 reach upwards of $3 trillion.
Tech stocks sold off hard due to pre-election fears. But now that we have answers for the road ahead, I expect some of those stocks to bounce back.
Lumentum Holdings Inc. (NASDAQ: LITE) is a San Jose-based maker of optical and photonic products. From semiconductor laser chips to complete optical modules and switches. These products move data at high speed using light, which makes them critical building blocks inside the cloud and AI/ML data centers that power today’s biggest models.
As AI spending ramps up, Lumentum sits in the middle of the buildout, supplying the optical hardware that connects it all.
And the stock is in a perfect position to bounce. It’s trading above the $600 support from July.
Here’s the contract I’m interested in:
$700.00 CALL Nov 13, 2026
I expect the market’s volatility to increase into the end of the year.
History is on our side (with respect to post-election price action), and I’m ready to make the most of the next few months.
Don’t miss out!
Stay Street Smart,
Jeff Zananiri
