alice

NFTRH; An Election ‘What If? Scenario (medium priority)

With the stock market’s breakout failure and then breakdown in October – which it has not yet technically remedied, despite the bounce – we opened the door to a target of 2100 to 2200 on the S&P 500. Acting as a technical robot, I automatically set that target, if it remains activated, out to 2019 so as not to get us in an emotional or sensational uproar. In other words, under normal circumstances these things take time.

But in setting that target we have also noted that it would simply be a take-back of the entire Trump rally. No big deal, if you’re prepared for it.

But with the intense divisiveness the US is in the grip of politically, and with the volumes of newbie investors (Trumpies, we’ll call them) we’ve shown to have flocked into the stock market (ref. the record levels of new discount brokerage accounts opened leading into the January blow off high) now that the ‘Commies’ have been banished, might we consider that there could be a giant air pocket in the market’s internals?

Personally, I am voting today as a referendum on Trump, as are I would guess a majority of Americans, either for or against. If his presidency is rebuked in the form of the Democrats taking the House and/or the Senate, it would seem poetic for the market to take back the Trump rally. The question is, would it be in a fast and violent swoosh or a grind?

In NFTRH 524 I let out a bit of hyperbole about how long-term Treasury yields also rose before the the 1987 market crash. Hyperbole or not, I have that in mind. With the FOMC on tap this week as well (CME futures traders are 93% for ‘no change’ to the Funds Rate on Thursday) things could get disturbed further if the Fed sticks its beak into commenting about the election results.

I am not going to play market reporter or play by play caller. In fact, given the above I have to sit back this afternoon and figure out what will be best for me, given the possibilities (which are not all negative; for example, what if the Dems win, the market tanks and the Fed sends a dove out the window to fly above troubled markets?

Being a full time weekend worker I am often not able to be a full time worker during the week. As luck would have it, tomorrow my schedule pulls me away from my desk for a large middle chunk of the day. So please do not assume I am going to be a wide eyed casino patron ready to report the news. That is why I am trying to define some things today, safely before post-election events.

Regardless of what goes on over the next 2 days, I think it will have been wise for each of us to at least consider the possibilities (positive and negative) as they could relate to our individual situations during an eventful and possibly fateful week.