We are in the 9th inning as far as this election is concerned. Remember game 7 of the World Series not only went to extra innings, there was a rain delay on top of it.
I woke up from my Sunday afternoon siesta to see that markets gapped up after learning FBI Director Comey backed off the Clinton investigation. The country is divided, Washington is a mess, day-after-day of WikiLeaks revelations, layers of scandal on top of scandal, ect.
I believe this sort of thing makes people very nervous. The underlying psychology of the stock market is it doesn’t like this stuff. People don’t buy stocks in this kind of environment. I can write thousands of words on what I think is going on in this country right now but in this forum, I’m going to limit my views to the market. That I mention the scandals at all is because they are part of market psychology and should not be avoided.
Last week when the market dropped on news Comey reopened the case I had two theories. One was markets don’t like uncertainty. The other was the globalist bankers are rooting for Clinton. That they could gap up on Sunday afternoon clearly shows financial markets are rooting for Clinton. It’s not even Clinton. It’s the same thing as Brexit; markets are rooting for the globalists. That’s the bottom line. So, if you clear your head through all the noise and remember that, you should be fine this week as it relates to your trading. Who you are voting for is an entirely different matter.
My hypothesis about markets is coming true. I told you to expect a bearish reaction coming into the election as the crowd had election fatigue. When it is going to over? The mood has soured under the weight of all the waiting and circus-like scandal attached to this cycle. In one sense the market is dropping because globalist bankers are rooting for Clinton. Obviously, there is noise in the very near term as evidenced by the drop a week ago Friday and last night. But that wouldn’t drive the markets down for days on end. Many sources have reported the S&P 500aa daily losing streak is the biggest since December 1980. So why would I say you can’t attribute 9 days of losing to the FBI investigation? Hasn’t the media told us Clinton is ahead in the polls? Because she’s ahead in the polls, what does anyone have to worry about?
So, here’s what I think of Sunday night’s gap up. I wouldn’t tell you this is a sucker’s play or a trap but its highly questionable that it could sustain. They are okay, they are representative of an oversold bounce or even get us back into the range. However, in no shape or form does it come close to the calculations I had after Brexit and it doesn’t even rank up there with the 293-hour low on October 13th in the SPX. I warned you at the time that while it was a good low, 293 hours on a 2193 hour high, you had to be very cautious about it.
Why do I believe this? Because whatever calculations we come up with, the events that are materializing in front of our eyes are likely bigger than any cycle I could come up with in the entire history of the Dow. I challenge any one to come up with an election more critical than this one. One can argue the country is more divided now than at any time since the Civil War. In the very least, according to social mood one can argue the financial crisis in 2008 is bigger than any financial event since the Great Depression. According to Socionomic theory, after extreme financial events like 2008, social mood turns angry relative to the degree of trend. We all know the outcome of the Great Depression was WWII. But even in that era, the US never had an election as contentious as this one. The outcome of the Great Depression was WWII. The outcome of the panic of 1906-7 which was a byproduct of the San Francisco earthquake was WWI. The byproduct of the 2008 financial crisis thus far is the Middle East being up in flames and migrants overrunning Europe.
So the next question is what to expect as a result of this election. It’s not going to be good, no matter who wins. Let’s be clear about this, if Trump wins, Soros backed entities plan on a scorched earth policy including riots per numerous sources. If Clinton wins, let me put it to you this way. In many areas of the country there were early voting lines that go around the block where many of the people waiting in line were wearing Trump hats and shirts. I personally saw pictures of it in Florida and Nevada. There is great enthusiasm for Trump, for Clinton? Not so much. On top of this, we’ve heard reports about the possibility of terrorist threats either on Monday or right there on Tuesday. If you meditate and connect the dots, you’ll realize the market rise over this decade is institutionally driven. I’ve told you this before, there isn’t much enthusiasm for this market from the public. The public is leaning towards nationalism as represented by Brexit. The institutions have gone the other way.