This Market Sector is Predicting a Landslide Election

As I have said before, since 1984 whenever the market is gaining within 3 months prior to the election date, the incumbent President will win the reelection. So far so good  and we have only about one week to go. Will the market tank next week? Sure anything is possible but per all the technical indicators, this is unlikely. We will still see a lot of fluctuations for sure but probably in a relatively tight range bound. So far I don't see S&P will decline much below $3400. Actually I see there is a better chance that the market may go up next week.

While the left-dominated media wants to paint out a very dire economic picture for you in order to scare people away from President Trump, no matter how much they peddle fear and panic, the U.S. economy is recovering. This week's jobs report shared just 787,000 jobless claims. October has seen the lowest levels since March of this year. This is all great for the President! 

From the trading perspective, as I have told my groups, doing swing trading per the range bound is a great idea for the near term, especially before Nov 3. After that, be careful as we may abruptly go into a very turbulent period! 

Let me share with you another viewpoint which suggests President Trump may likely win in a landslide fashion. Believe or not, we will see the result soon!

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I believe the markets are telling us that Donald Trump will win a second term in office.

Let me be clear… nothing I'm writing here is meant to be political commentary. I'm not saying I am pro-Trump, nor am I saying I'm pro-Biden. I'm simply outlining what the markets tell me based on my own framework for discounting the future.

And right now, the markets are telling me Trump wins in a landslide.

Why?

Because tech stocks continue to rally, rather than crash.

Let me explain.

Tech Stocks Telling Behavior

Joe Biden has made it very clear that if elected, he would end the Trump Tax Cuts.

Now, the election is November 3rd, 2020. However, if he won the Presidency Joe Biden would not actually be sworn into office until January 20, 2021 (or so).

Put another way, if elected, Biden would not actually be able to end the Trump Tax cuts until sometime in late January / early February 2021.

Which means every hedge fund manager, mutual fund manager, and professional trader would have a small window of time to lock in his or her gains prior to the Trump Tax Cuts ending and a higher rate of taxation hitting their market profits.

What do you think those people who manage tens, if not hundreds of billions of dollars' worth of assets would do with their profits during that time?

The answer is obvious: they would sell their winners in 2020 to lock in the gains at a lower tax rate.

And where have the largest profits in stocks occurred during the Trump years?

The chart below comparing the tech-based NASDAQ (red line) and the S&P 500 (black line) says it all.

Remember, stocks are a discounting mechanism. We are now a mere two weeks away from the election. So, the market is anticipating the outcome already.

And what are tech stocks doing?

They're rallying hard, approaching new all-time highs.

If the market thought Joe Biden was going to win, we'd be seeing stocks, particularly tech stocks, struggle to move higher. They're not. They're ripping higher. Which tells me that the markets believe higher taxes AREN'T coming, and investors want to buy — NOT sell — right now.

Graham Summers
Editor, Money & Crisis