I cannot remember an election day with this much public interest. The polarization in the U.S. is at the breaking point and it would not take much to break the next two days.
I suggest if your a trader that you lighten up until any uncertainty of the election resolves itself. Despite the odds now approaching 4 to 1 on Clinton I feel there is still enough uncertainty in the air to make any trading position high risk. Both on the short side and the long side.
I received quite a few emails after my post yesterday that were of a political nature. Please refrain from sending political emails. I have no interest in turning this site into another political site. The only reason I will comment on politics here in the U.S. is only as it relates to what effect it might have on the stock market.
On any given year I could vote for a Democrat or a Republican depending on the issues I feel are important. I refuse to accept the polarization that most find comforting. If the majority of Americans felt this way we would not have the extreme positions we are seeing on both sides today. Polarization is bad for the country and the markets.
Let me also make the comment for those of you that think I might lean to the right. I admit to voting for Obama in 2008. I felt we had a good chance at Obama extending the King legacy and continuing to heal the racial divide in the Country. I was proud to vote for the first African American President.
So hopefully this allays any fears that I might lean one way or another when I make these comments related to the markets. I try to be as intellectually honest as they come with this site.
So again please no political emails except how they might relate to the stock market.
Getting that out of the way I will try not to comment again on this.
This morning the market is off about .20%. If Clinton gets in I expect a nice rally as soon as it becomes clear. Thus if your not trading the overnight markets you might be staring at another large gap up in the morning.
I received an email suggesting since the odds are 4/1 now why not position yourself for a Clinton win. You could do that but with the charged atmosphere and the fact that if the election turns out close I can foresee the losing party in the courts similar to Gore Bush. Neither side is going to take a close loss graciously. That has the potential to send the markets into a nose dive.
So as usual I recommend caution. The markets are going to be around Thursday morning. No need to gamble. Gambling on a hunch is for the fools. I have always said that I do not need an edge to wager, however I do have to think I have an edge before I wager. Here I do not think there is a bet on the markets at this point where there is an edge.
You could do a straddle where you take both sides in the options market. I have not looked at these but my guess is the premiums are too high right now to find any type of edge. But if your inclined to wager you might do a google search and see if someone has figured out this type of position on election day. There are a few very smart investors out there that share their thoughts.
Today again I am standing aside. I positioned myself wrong on several mean reversion trades last week. I did not anticipate Comey making an announcement with 650000 emails to sort through prior to election day. But it did not cost me that much as I exited when the markets were up about .5% and the took a 1% turnaround by the close. So the cost to me on the position was about 1% in total for exiting prior to exit time on a “hunch”. But as I said when the human mind starts working on these trades not much good can happen:)
I might try some scalps in the ES or NQ today but this morning I am not in the mood. I have a number of things to do today the most important of which is to get out and vote. I suggest everyone do that today. Its the one right as citizens we have that allows us to have our say on how we are to be governed.
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
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