The stock market took a turn for the turbulent in the last week or so, perhaps from the effect of the winding up of bullish option games, which seemed to help further inflate the major technology stocks that have dominated the market rally. Randall W. Forsyth writes that “however, there are other, more fundamental factors to consider along with this technical.”
Randall W. Forsyth for Barrons:
That is the issue of choice. The RealClear Politics average of the polls has been reduced, but shows former Vice President Joe Biden with a 7.5 percentage point lead over President Donald Trump. RealClear Politics’ average tipping pages put the two candidates in a virtual dead heat at the end of August after the Republican National Conference, but Biden’s management was roughly in line with the site’s average of votes late this week.
Confidence in the polls is not high after they predicted that Hillary Clinton would win the White House four years ago.
For the stock market, the ten close elections in the period after World War II have seen sales within six to seven weeks before the election, according to a research note from Deutsche Bank’s strategists led by Binky Chadra … Investors should apply for elections Week or weeks, instead of election day, according to a JP Morgan client conference call. No clear winner can show up the night of November 3rd or even early the next morning, given the extra time that may be required to vote.
Deutsche Bank strategists, meanwhile, find close elections have been followed by strong rallies averaging 5%, regardless of which party wins, as political risk hedges are closed. Futures on the Cboe Volatility Index, or VIX – also known as the market’s fear meter – shows expectations of increased volatility through October and reduced volatility after elections until December. Given the likely increase in postal voting and the controversy surrounding it, they suggest that the market may be too rare prices in a normal voting result, so they recommend protecting the portfolios in December.
MacDailyNews Take: Yep. This happens every four years. The market hates uncertainty.
Apple’s stock price will fluctuate here for a while. AAPL longings are used to a little turbulence from time to time. Tighten up and enjoy the ride (or if you have a weak stomach, try sleeping through it)! – MacDailyNews, September 9, 2020[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]