How Important Are the U.S. Midterm Elections for Markets?
US500
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The S&P 500 continued Friday’s late bounce on Monday as it added another 1%.
S&P 500 Index Daily Chart
Economic headlines remain mostly the same as everyone is watching the today’s midterm elections in the US. But we shouldn’t expect today’s result to move the markets in a meaningful and lasting way. Partisan politics aside, stocks have rallied and fallen under Republicans just like they have under Democrats. Remember, we trade the market, not politics, so leave that Red and Blue stuff out of this. This economy rests in the Fed’s hands and it doesn’t matter who is in charge of Congress.
If the election were not happening today, I would be buying Friday’s rebound. But since we have an election today, I’m buying Friday’s rebound. See what I did there? I trade the market, not politics, and right now the market is telling me it is time to buy the bounce, so that’s exactly what I doing.
Now, don’t get me wrong, I’m not saying the election will have zero impact on the market. No doubt we will get a knee-jerk bounce tomorrow morning following a “Red Wave” and prices will slip a little if we get a “Blue Wave,” but after that initial reflex of partisan volatility, expect the election to be old news by lunchtime.
I’m buying and adding to Friday’s rebound with stops spread around Friday’s intraday lows. If prices fall under my stops, I’m out. If the rally continues, I’m adding more and lifting my stops. Let other people second-guess the headlines.
