After 9 straight down days and a little help from the FBI, the stock market looks to soar higher at the opening on the increased likelihood of a Clinton victory on Election Day. While I completely understand the “devil you know” argument and continuation of much of the same from the past 8 years, I am somewhat surprised the market is so at ease with the prospect of higher tax rates on job creators and widespread social program spending. However, that could be because the market doesn’t believe that Congress will go to the democrats and without that, Clinton’s campaign theme to significantly raise taxes on higher earners and offer free college tuition is unlikely to happen.
Anyway, as I mentioned after stocks had declined for 8 straight days, another good bull market buying opportunity was close at hand. I’m just not sure that stocks are now launching the rally I see occurring into January. We’ll see in a few days how price responds to the election, where leadership comes from and how high yield bonds behave. The worst case as I see it would be for this rally to peter out in the days after the election, but bottom by Thanksgiving before hitting 19,000 by January or so.
I am sure I will have more to say tomorrow, including a look at my electoral map. My plan is to Tweet as the results come and see how the Asian markets react as well as after hours trading in the S&P 500.
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