Dow: -77.46…
Nasdaq: -48.01… S&P: -13.78…
The market always processes and discounts things in advance. I tell you that all the time, but you know that anyway. Usually the market is very efficient with this process and does a good job of taking off risk ahead of an event.
Why I am short
The one time that processing an outcome failed miserably at this was Brexit. The investment world thought that Brexit wouldn’t happen , but it did. See chart below for the reaction. The market got blindsided and the SPX lost over 100 handles in a couple of days. See the red circle.
It feels to me right now, based on polling, that the market, at least so far, has been wrong in predicting this election outcome. I don’t know who will win this thing, and probably like you, I have election fatigue and just want it over with, but right now the market is channeling uncertainty and that’s why bids are dropping, This may only be a short term event, and on any big dip I will look to get long. Right now though, I’m cautious, and the stocks I am short have weak charts to begin with.
The Fed was also fairly hawkish today about a December rate hike, so that didn’t help matters. I told you that if the SPX broke support at 2115 that we could take a swift ride to the 200 day moving average at the 2080 level, and right now that looks to be exactly what is happening.See chart below.
Lets see where we go tomorrow, but a downside flush may be needed, and long overdue in my opinion. More tomorrow. Stay safe out there.
Joe