Topmen
2022-11-09

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@UltrahishamMid Term elections day No matter how apolitical you might think the market is or should be, we cannot deny that market policies and government spending etc are ultimately decided by politicians. Hence, the direction they are taking in terms of steering the country and the implications will ripple onto and into the very fabrics of the society they are leading and that of course includes the economy as well. That is why the decisions they make impact livelihoods and hence the big responsibities they shoulder. The markets like stability. And a clear direction. Hence, it would be in the best interest of the market to see a clear and undivided leadership. And in terms of US politics, that means control of the house and senate by the same party that the president belongs to. The logic issimple. Because of the way the government isstructured, and to allow checks and balances, the executive office which is the one headed by the president needs to be counter checked by other 'unbiased' parties to ensure no iron fist kind of leadership is in place. But that also introduces red tape etc which delays legislation and sometimes that reduces efficiency. Short of giving a lecture on political science, I will just say, my point is this. The above is based on logical theory. However that notion does not work on the financial market. If the Republicans take the House and Senate,I believe the market will cheer and rally. Because that means the Republicans will be in control of all the major departments of the government except the executive office. What the market likes is gridlock. Because it lessens the chances of new taxes and regulations like the one that curbed the exports of advanced chips. On the market front, the markets $DJIA(.DJI)$, $NASDAQ(.IXIC)$and $S&P 500(.SPX)$continued grinding upwards. If I may analogise again, it reminds me of battle troops moving towards the grand battle. At the moment, the bulls are gaining ground as the bears cede territoryto them. But lets not forget the levels that almost everyone is watching with bated breath. The 200 day moving average is now coinciding with the long term downtrend line as well as awhole bevy of confluence zones. The big grand massive troops of bears are probably amassing there in anticipation. The bulls' resolve andmight will be tested here. Everything is stacked against them. Even technically, the bears are expected to triumph and trigger the C wave down. However, there is still a glimmer of hope that the bulls can pull something off. Because as the famous adage goes, bull markets do not start in times of optimism. Its when everyone has given up on them. That is when they turn the tables around. Is it soon? Or is there going to be another retreat before the bulls try again? I am hopeful but at the same time cautious. Stay safe! 😊
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