If there was still any doubt as to whether the market would be risk-in or risk-off in the elections, Friday’s sell-off made it pretty frozen. The switch has switched to the off position. The late week breakdown ignited after the yields of four of the five FAANGs, which were mostly positive but may have been absent from the counseling department (see more below). Combine that with the COVID-19 resurgence, the Senate adjournment with no further progress on a stimulus package, and the culmination of a long and controversial election season, and it’s no wonder investors seem ready for a break. Even before the FAANG gains officially put things on hold, many investors were showing signs of risk aversion ahead of the election. This was made pretty clear with sales on Monday and Wednesday. The major indexes had their worst week since March and now people are openly making comparisons between that pre-election skid and what we saw in the 2016 election. As noted this morning, keep your eyes on the future from Sunday night through Monday, especially Tuesday night when the returns came in. Election night 2016 was a wild one for the futures market, showing a sharp dip when it initially looked like the results could be challenged, followed by a meteorite rally when it became clear that there would be a winner without a lot of drive take place this time when things look irritable late Tuesday night. Or if it looks relatively smooth, stocks could get a boost. It is probably not so much who wins, but whether there is a chance of a long, drawn-out chaotic battle for a winner. New Fed Policy A sharp rebound at the end of Friday’s session could move Monday’s opening into more solid territory. Breaking news from the Fed around 40 minutes before close of trading may also have contributed to the late rally. The Fed said it was reducing the minimum loan size for smaller businesses that want to take advantage of the Fed’s loan program. It also eases debt restrictions on companies that are already using the program. The Fed called these steps “two important ways to better serve smaller businesses that employ millions of people and continue to experience declining revenue from the pandemic.” Basically, the Fed is trying to get more money into the economy – something Congress is doing and the White House has not had a stimulus since spring – which could potentially raise expectations for economic growth. The idea might be that this could help small businesses bridge the gap between now and any fiscal stimulus. Strong data raises hopes for a new week. There are other signs that the situation may improve once the electoral excitement subsides. Economic data has been solid lately. Third quarter gross domestic product (GDP) was above estimates yesterday, and initial unemployment claims have finally eased somewhat. New home sales in September were a bit subdued, but that’s the only data that looked below average all week. The problem is that the good news comes up against a wall of worry centered around the COVID-19 election and lack of incentive. By the time we get past those (and it might take a while) the risk premium in the market could continue to dissipate, as we saw this week. Tech-wise, a lot of damage has been done to the charts this week. The Dow Jones Industrial Average ($ DJI) retested its 200-day moving average (before leveling out above it – see chart below), and the SPX removed its 50-day and 100-day moving averages. There appears to be potential technical support near the SPX 200-day moving average around 3130, but that’s still a long way to go. So look for cops to defend the 3200 psychological grip if things keep falling. But if you follow corrections, the Nasdaq (COMP) is down 10% from its all-time high. The SPX is down 8.7% from its high, so it’s close but not entirely in correction territory. AFTERNOON CHART: MUSCLE STORAGE? The Dow Jones Industrial Average ($ DJI candlestick) retested its 200-day moving average (blue line) and closed above it. This is a level that the index visited in June and August (yellow circles) so it could be a crucial level to watch in the future. Data source: S&P Dow Jones indices. Diagram source: TD Ameritrade’s thinkorswim® platform. For illustration only. Past performance does not guarantee future results. Roadmap at Home the Missing Guidance One thing besides the virus and elections that could potentially “catalyze” some thoughts (is that a word?) Wall Street out of its doldrums is profitable season, which is roughly halfway through. As usual, the media headlines have focused on the number of companies that have “exceeded” Wall Street expectations. That’s about 85% so far, but it may not be the best way to judge. That’s because analysts’ forecasts for the quarter have been so conservative that it’s like your child is receiving a participation trophy. Again, investors are getting wise on this, as you can see this week from some companies like Microsoft Corporation (NASDAQ: MSFT) reporting a blow but being penalized for weak guidelines. Many companies, including Apple Inc. (NASDAQ: AAPL), are still holding out and declining to provide guidance. Some cite “uncertainty”, although it is questionable that no neighborhood was ever “safe” before the arrival of COVID-19. It’s entirely possible that this lack of guidance could be a factor preventing stocks from benefiting as much from earnings as usual. Other major companies besides AAPL reporting recently but not sharing guidelines include General Electric Company (NYSE: GE), Caterpillar Inc. (NYSE: CAT), 3M Co (NYSE: MMM), Xerox Holdings Corp. (NYSE: XRX), Raytheon (RTN), and United Parcel Service, Inc. (NYSE: UPS). If investors know what happened last quarter but can’t get a forecast for this quarter, they’re stuck with no roadmap. Another look at FAANGs The results of the four reported FAANGs looked good on balance and without major errors. However, it appears that for all but one of the companies, Alphabet Inc (NASDAQ: togetL), the pre-profit exuberance has subsided somewhat. That’s because it wasn’t so much about the income statement as about the stuff under the surface. With Facebook, Inc. (NASDAQ: FB), investors saw higher-than-expected spending in the third quarter. At AAPL, there was disappointment that iPhone sales fell short of street expectations. It’s hard to find anything really improbable about Amazon.com, Inc. (NASDAQ: AMZN) results, but this stock could take a bit of profit-taking. The softness of the iPhone in the AAPL quarter, with customers waiting for the new 5G product, this could actually create tailwinds for AAPL in the December and March quarters. That’s because some of the people who were waiting to swap their phones earlier may do so during the current quarter. Rather than pushing demand like many tech companies did at the start of the pandemic, AAPL has “pushed back” demand. Almost every S&P sector lost ground on Friday as this disappointing week ended, but none have been punished more severely than Tech. It fell 2.1% on Friday and has fallen 2% last month. Investors may not be used to tech being on the defensive this way, but given the sector’s high value in election season, it’s not too surprising to see more rewards coming out of it than other sectors. One asset group that went against the grain on Friday was the bond market. As a result of the pressure on government bonds, the 10-year yield reached a new four-month high of over 0.87%. Third quarter GDP data may have boosted returns, but it could also reflect the same evening of positions we saw in stocks today. People had a bias on the long side of the bond market this week but didn’t want to go into the weekend with that exposure. There was also a rather subdued reaction in the Cboe Volatility Index (VIX) today, as it did not. t rise above the psychological level of 40. Perhaps there aren’t as many concerns about the elections as people originally thought, or it could also reflect people leaving their positions before the weekend. Quick Look Ahead There’s a massive calendar of construction spending next week, October auto sales, factory orders, and – final, but likely first in the hearts of investors – October payrolls report on Friday. A lot of the fireworks are over from a profit standpoint, but there is no public holiday next week. PayPal Holdings Inc. (NASDAQ: PYPL), Allstate Corp. are expected to be among the reporting companies in the coming days. (NYSE: ALL), General Motors Company (NYSE: GM), Kohl’s Corporation (NYSE: KSS), and CVS Health Corp. (NYSE: CVS), Marriott International Inc (NASDAQ: MAR), and Norwegian Cruise Line Holdings Ltd (NYSE: NCLH). The last two could be important to watch for travel requirement updates as the US and Europe deal with this new wave of virus cases. TD Ameritrade® comment is for educational purposes only. Member SIPC.Photo by Luca Bravo on UnsplashSee More From Benzinga * Click Here For Benzinga Option Deals * Apple Falls 4% As iPhone Sales Disappoint, But Most FAANG Results, Including Amazon, Look Solid * FAANG Fans, at your expense: Benzinga.com expects Apple, Amazon, Alphabet and Facebook earnings after the end of (C) 2020. Benzinga does not offer investment advice. All rights reserved.