A reasonable investor would conclude that if the markets have been reluctant to pull back since the September rate cut, why would they suddenly decide to suffer a pull back just two weeks until election results are determined?
Of course, we have to factor in some volatility with the bulk of earnings set to be released over the next couple of weeks, not to mention the early November Fed meeting.
What seems to be occurring, however, are the markets factoring in a Trump victory, with a fair deal of hesitancy continuing to exist, in case of results favoring Harris, creating a situation where investors have to restructure a good portion of their bets.
In either case, especially when considering the technical levels that the SPX and NDX find themselves resting at prior to the election, a clear result will more than likely be greeted with a great big sigh of relief by investors.
A Harris victory would result in an initial jolt downward. However, it would be short-lived.
As long as the result is clear, the markets will more than likely take the cap off of the upside, with a significant rally ensuing for some weeks.
For this reason, it is wise to assume that the current setup is a rare buy the rumor, buy the news type of event, as opposed to the traditional buy the rumor, sell the news that seems to be worrying some investors at the moment.
As far as momentum is concerned, there are two momentum growth names that investors have to own going into December. We have been trading both of these names extensively over the past few years, with a further commitment being made in recent weeks to both.
The most unexpected outcome during the weeks ahead would be for earnings, elections and the Fed meeting going by with the markets yawning at all of these events, while continuing their recent propensity towards a lack of overall volatility, while simply grinding along their merry way.
Continue to make adjustments as needed.
Aggressive when need be. Defensive when need be.
There are many reckless among us currently.
One sided, extreme biases, while seemingly alluring during persistent trends, lead to misery more often than not.
The willingness to adjust will prove invaluable.
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