Stock Market Patterns
This market phenomenon states that there is an 86% chance that Trump could win the elections. It’s the economy stupid were Bill Clinton’s famous words that helped him land the White House. Nothing has changed since then and history indicates that if the markets don’t fare well before the elections the incumbent party tends to lose. What counts the most is the market’s performance three months prior to the elections.
When the market climbs, the incumbent party wins and when it declines the incumbent party loses. We have had a total of 22 elections since 1928 and the market trended higher in 14 of those elections. The incumbent party won the White House in 12 out the 14 times. The market also dropped in 8 of those elections and the incumbent party lost in 7 out of instances. This indicator was wrong in only three instances, illustrated in the table below courtesy of Zerohedge.com. This gives this stock market indicator an astounding accuracy of over 86%.
Once again, we have even more evidence that this election is going to be an action-packed event before and after the elections. Moreover, uncertainty leads to panic and rapid reactions and such reactions create opportunities. Remember that the Fed is stuck between a hard place and a Grenade. If the markets are allowed to crash then, the illusion of economic stability is shattered. Moreover, this is not something the Fed can afford for this dream is working to a great extent; the world still believes the US dollar is the best currency to hold. If that illusion is shattered, foreigners could panic and dump the USD.
As we stated before from an investment perspective, a Trump win would create a better opportunity. However, we are not in the election calling business, so we are not going to attempt to call these elections. What we can tell you is that Social media as a source of news is exploding; this is why we worked so hard to build a significant social media presence. We spotted this trend earlier and knew that this would be the best place to gather real-time sentiment data. Social media outlets are almost all ranking Trump higher than Hillary.
Stock Market Patterns Update Oct 2019
It takes zero effort to panic and the reward is exactly zero; those that panic in the face of adversity are given what they deserve. In terms of the market that means less than zero, as the masses always sell at the bottom and buy at the top. The astute individual that does not panic walks away with a huge reward and that is how it’s been for millennia and nothing is going to change for another 1000 years.
A Tactical Investor refuses to panic even when it looks like there is no reprieve in sight, for history indicates that panicking never pays off when it comes to the markets. The masses were, are and will always be prime cannon fodder candidates; they are hard-wired to panic and when they do the outcome is never good. Examine any panic based event, and one thing stands out like a sore thumb, the masses always took a beating.
Copper continues to put in a bullish pattern and once the MACD’s on the monthly charts experience a bullish crossover, we suspect it will not be too long after that before the markets explode.
According to the Tactical Investor alternative Dow Theory, if the Dow utilities trade to new highs, it is a good omen of things to come. In other words, the Dow industrials will follow the same path sooner or later. The Dow utilities surged to new highs in September and as a result, the Dow industrials and transports are expected to follow suit. The transport sector is expected to outperform the overall market.
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