How Will Tonights Results Play Out Tomorrow? (FAZ)
Good question… I wish i had the answer and so do a lot of traders out there. I do not speak much on the topic of politics so bare with me….I think the biggest worry among both Lib’s and Repub’s is one side of the Capital building being Dem controlled and the other being Senate or vise versa. This scenario can spell disaster for the economy if we see another cascading event much like we saw in late 2008. What saved us in 2008 was somewhat* bipartisan cooperation, granted it took some time and pressure but a solution was reached stopping our markets spiral into hell. Granted the solution might not have been correct, it did stabilize
market for the time being. If we do see another massive systemic issue come to light which would need government intervention; how might new regulation or solutions be implemented in a rush if the senate and house cannot agree? It will be gridlock.
Gridlock is not good if the market is flash crashing, housing collapsing, war, or even worse a massive inflationary or deflationary event which would need house approval to stem a collapse of the monetary system. I know i sound like a pessimist but you always have to plan for the worst no matter how rosy a situation may look. As for the markets tomorrow is anybody s guess, fund managers may sell the news. As you know the saying goes “buy the rumor, sell the news” Though what is the news? will the election results really be news not already baked into the index’s or will something out of left field spark a rally or sell off like so many have been speculating about?
The chat above is a daily chart of the S&Ps, notice the two yellow circles both at the top of a massive up trend. You see how the previous uptrend concluded in May, with a massive correction. (flash crash). Yes the rubber band is stretched but the question is will she stretch more?