To The Moon

Tight race!

The mid term elections are so tight there is noclear winner as of yet despite the Republicansbeing favoured to at least take the House by aclear margin. Now it is down to the wire. History favours the bulls as stocks tend to rise postmidterm elections and part of the reason could be due to the policy clarity it brings. That could bring some hope to the bulls especially approaching the critical 4100 levels on the broadmarket index.

The markets $DJIA(.DJI)$ , $NASDAQ(.IXIC)$ and $S&P 500(.SPX)$ all continued their move upwards on Tuesday as the country votes. The statement 'History does not reflect future performance' is kind of part of every investment. But it is hard to ignore the fact that the market is up 100% in the next 6 months post mid term elections since 1950. Hard to be on the bear side with that kind of data! The broad market SPX was up 18 out of 18 times in the following year with almost identical historical returns regardless of a Democratic or Republican president. Citigroup's research puts the average of the gains at 20.1% on average. And this fact holds ground even with a recession! According to Citi, even if a recession occurs next year which happens in three instances, the returns were 24.4% on average! And that is even more applicable now with a recession being widely expected in 2023.

Even the technical picture is aligning pretty nicely. Either the bulls overcome the 4100 levelsoverwhelmingly and turn the tide against the bears pretty soon ignoring clamours for a C wave down to turn the picture into a new bull wave or allow the C wave to happen in what could even be just a retest of recent lows to sparkoff the bull rally early next year.

Hence in my opinion, the light seems to be getting stronger for those who look at data rather that sentiments. I am positioning for the future and hence happy with the layered positionsmentioned earlier. Because of uncertainty, I reeserved some cash for a possible C wave to make them work harder. But if market suggests that they want to go higher and price action at the 4100 levels will be important, the time might be soon to rejoice and go full risk on. I am still staying cautious at the moment.

Stay safe 😊