Media companies stand to gain a large amount of income from this election, as both candidates have spent over $90 million in ads and that is just on Facebook (FB) alone.
Since 2018, Facebook has brought in more than $2.2 billion from political advertising. TV ads run in support of the primary presidential candidates have also made a decent chunk of change, topping over $1 billion this election combined for key states.
This 2020 Election has become the most expensive in history.
Large ad spending can also be linked to the pandemic as people have been at home consuming media. This is why keeping tabs on the media companies could be an interesting play, as this year's money for online advertising has been flowing at huge rates.
We are looking at several setups, particularly ViacomCBS (VIAC) which reports on November 6th. This is great news as whatever the range is this week, we can use the election opening range to buy or not depending on whether it can clear this week's highs.
Looking at the weekly chart, the 50-WMA in blue shows us that it has cleared after nearly 2 years trading below it. The slope on the 50-WMA is negative; however, the daily chart is showing a bullish setup with a neutral slope on the 50-DMA. The 2020 high was made in September at 31.40.
Looking ahead to earnings, should VIAC take out the 30.00 area, the next major resistance comes in at around 35, or a monthly moving average.
We will be watching both earnings and the election opening range. We like the potential here both fundamentally, given the election spending, and particularly the risk setup on the charts.
For some of our other picks in this media sector, please feel free to join our service for actionable alerts on trades.
- S&P 500 (SPY): Broke resistance at 340 and held. Watching for second close over 50-DMA
- Russell 2000 (IWM): Resistance 164. Support the 50-DMA at 155
- Dow (DIA): Crossed the 50-DMA but could not hold. Must clear 279
- Nasdaq (QQQ): Held over 50-DMA, with next resistance at 297 October high.
- KRE (Regional Banks): Bearish Island Top pattern. Gap to new 60 plus day high followed by gap lower. Can it hold the 200-DMA?
- SMH (Semiconductors): Resistance 190. Support the 50-DMA 176
- IYT (Transportation): Failed second day confirmation over 50-DMA. Not far away and could make another attempt tomorrow
- IBB (Biotechnology): Large range day as news on BIIB came out about FDA backing Alzheimer's drug. One of IBBs holdings is BIIB
- XRT (Retail) 50 pivotal, 52 key to hold
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
