Wall Street has now experienced the longest negative spell in nearly 36 years, with nine consecutive declining days for the S&P 500, despite the encouraging intraday bounce on Friday. The Gorilla still thinks that the price action is consistent with an orderly correction, despite the 4-month lows registered by some of the major indices. According to traders, the sudden spike in volatility could mostly be attributed to the elevated risk before this week’s election, and the return to less hectic trading is in the cards after the clash of Hillary Clinton and Donald Trump.

The Presidential election stole the show from economic numbers last week, despite the string of important releases. The Fed’s hawkish tone regarding the December meeting was somewhat muted by the slightly disappointing ISM non-manufacturing PMI, the relatively large miss in the Chicago PMI, and of course the slight negative shift in the labor market. Treasuries rallied all week long, as the bond market remains skeptical about the timing of the next rate hike by Yellen & Co. Traders might take a much-needed breather in the second half of this week, as Friday’s consumer sentiment index is the only major scheduled release after Election Day.

Technicals remained in correction mode, as the Dow and the S&P 500 broke below their September lows to trade at the lowest levels since early July. The Nasdaq continued to outperform the other major indices, although all three benchmarks closed well below the 50- and 200-day moving averages, following two weeks of negative price action. Small caps lagged the broader market until Friday, and finished way below their key moving averages again. That said, the Russell 2000 led the market higher on Friday, providing a positive signal for bulls. The Volatility Index (VIX) continued higher and hit a 4-month high near 23, as the political uncertainty weighed heavily on investor sentiment.

Market internals got weaker once again, as the deep correction in small caps reflected in poor numbers up to Friday’s bullish move, which healed some of the recent damage. The Advance/Decline line continued lower for the third week in a row, as declining stocks outnumbered advancing issues by a 4-to-1 ratio on the NYSE and by a 5-to-1 ratio on the Nasdaq. The average number of new 52-week highs took a hit on both exchanges, falling to 33 on the NYSE and to 38 on the Nasdaq. The number of new lows almost doubled, rising to 86 on the NYSE and 168 on the Nasdaq. The ratio of stocks above their 200-day moving average also confirmed the correction in the bull market, falling to a 7-month low below 55% on Thursday, before the rebound on the last day of the week.

The 10% decline in the price of oil caused another wave of short-selling in the battered energy sector, which still populates the list of the most shorted issues on both the NYSE and the Nasdaq. The short interest in struggling wearable maker Fitbit (FIT) hit 54% following the company’s lackluster earnings report, which pushed the stock lower by almost 40% in one week. Oil & gas equipment provider RPC (RES) showed notable strength in the unfavorable environment, with the short interest in the company still being above 50%. Western Union (WU) is back in first place on the list with the highest the day-to-cover ratios (DTC), with a reading of 22, although the stock remained relatively strong. Short sellers of packaging firm Ball Corp (BLL) might be starting to feel the heat, as the company reported great earnings, while the DTC ratio of 19 remains among the highest.

The Gorilla will concentrate on the Presidential election after the central bank-heavy week that didn’t cause any major surprises, despite the abundance of crucial economic releases. The earnings season is drawing to an end, and the Gorilla hopes that the declining trend in profits is also near. The major indices are still close to their all-time highs, despite the six-quarter long earnings recession, and traders think that the widely predicted recovery could fuel a new leg up in the bull market. The price of oil might be back in the spotlight later on this month, as the agreement on a supply cut between the major OPEC nations is already looking fragile, still three weeks before the actual meeting of the cartel. Stay tuned for a historic week on Wall Street!

Late news: It was announced on Sunday that based upon its review of newly discovered emails, the FBI has not changed the conclusions that it expressed in July with respect to Secretary Clinton. This news immediately caused a 1%-1.5% surge in the futures of the major indices.