Looking at the markets this morning it appears we are going to start the week in a positive vein. The markets are liking the idea of a Clinton win. There are many theories why and I will not try to speculate the reason. One can only guess but the overall idea is that it will not be a dramatic change from what we have seen in the past. Along with the idea that Clinton will be friendlier to the middle class and less progressive than what we have seen over the last 8 years.
That’s the theory anyway. Only time will tell. And of course, the election is not over. If Trump were to pull off a miracle recovery I suspect the markets would nose dive in the short term. But not near as much as the media is telling us.
So as an investor one of the things to watch is any change in Trump’s chances this election. It’s a hard one to watch however especially after the Brexit vote. My thought is that the polling is most likely slanted in favor of Clinton by 2 to 4 percent.
It’s sort of like extrapolating the public numbers in sports betting from nonbetting consensus numbers to numbers where people actually are placing wagers. There is an extrapolation that is fairly accurate.
Now if the election coming up is a risk factor the other risk with the election is if the vote is close enough to warrant either side not accepting the results and therefore sending the U.S. into a constitutional crisis. The polling numbers do not indicate that but if they tighten up that is a possibility to consider.
So we have that at home and we also have the geopolitical risks that I have talked about before. They have not changed. I do not know the target date for the Russian flotilla to reach the gulf but I anticipate increased tensions when they arrive that could shake the markets.
Now disregarding the above and looking solely at the markets alone they appear to me to be setting up a move to the upside. As a contrarian, I see many indicators that people are just afraid of the markets right now. I can understand that as this sideways chop can be the most damaging to a traders bankroll. Chop really is a killer if you fight it.
I am flat now in the markets. Today I hope to make a few Breakout trades long. But that will depend on how the internals looks the first 5 to 10 min of the trading day. Mean reversion now is off the table as we are not close to a short-term extreme. Chop not only makes breakout trading difficult but tends to make mean reversion trades on daily charts nonexistent.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
RickJ’s Handicapping Picks