EDITOR: | October 1st, 2018

Do Markets Really Care About the US Midterm Elections?

| October 01, 2018 | No Comments
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Given November is often a time when markets are scary, what do I advise for October 2018?

First, looking past the US elections, we see blue skies! We also note increased market volatility: Traders Heaven, but not necessarily Investor’s Hell. Beginning this week, markets sport a less favorable Risk/Reward short term. At the same time, downside is likely limited, if at all, and of short duration.

Political events often provide a good excuse to buy or sell stocks. This suggests taking some chips off the table or place trailing profit stops. Fresh Shorting should be selective e.g. our timely TSLA short recommendations ~ $300. Additionally, Long/Short pairing can be prudently profitable.

Our Election Forecast:

  • Republicans 51-53 Senate Seats
  • Republican 218 Majority +/- 5 House Seats (can go either way).

In one scenario the Republicans are fully in charge. In the other we have a divided Congress which many pundits consider a positive.

Either way, we forecast a more bifurcated market before and after US Midterms (but not necessarily the same sectors). No rising tide floats all boats – paying attention to stock selection will again prove to be a profitable exercise.

Given rising inflation, geopolitical and trade war risks, emerging market concerns as well as frequent overvaluation, we have advised to Take/Protect some Trading profits ahead of the Fall US Midterm elections. While most “concerns” are merely noise; three factors we are watching are:

  • The market’s short-term reaction to trade war issues which is in our view ultimately positive.
  • The November US election anticipation & reactions: Be prepared to buy any serious dip circa the US Midterm elections!
  • The 7th or 8th Fed interest rate increase in January or December can trigger a short-term drop in markets.

Does all this add up to a compelling reason to sell now? No, but we repeat it is prudent to consider reducing or adding protection before US Midterm Elections.

Given “reasonable” Price Targets have been reached or exceeded, is it not time to Protect (stops), Rotate and/or selectively Distribute/Sell?

If you are not an active trader, it is wise to protect profits with appropriate trailing stops, so as to not to miss more of the upcoming trade war victory rallies.

  • Over time employ Sector rotation into MAGA stocks;
  • Using stops and hedging, raising cash and/or writing calls promotes sound sleep.
  • New trades and some investments be in Long/Short Pairs.

Trading Notes

We are hardly bearish: given the growing strength of the US economy, company profits and labor market along with sky high US consumer confidence and stock buybacks as well as President Trump’s 2018 Horoscope. While DJIA, NASDAQ & SPX have all reached protect zones as forecasted, they easily can rally higher as the US trade wars are won!

Note we do not plan to short aggressively before early 2019 (or Late December 2018). 

Shorting Triggers on Watch:

  • SPX 2950+
  • BONDS ~3.20 

Bottom Line Our Advice:

NOW is a good time to begin to prepare a list of the price of stocks you own that you want to Sell (or stop), and those you wish to Buy, following any BIG market rally or upset, respectively.

Publisher Note: Special thanks to our esteemed colleague, Henry Weingarten for becoming a contributing columnist for InvestorIntel.com. Please also note that the Disclaimer from The Astrologer’s Fund Inc. is prudent to review and is listed below.

DISCLAIMER: Past results are not necessarily indicative of future forecasting accuracy or profitable trading results. The Astrologers Fund Inc. accepts no liability whatsoever for any loss arising from any use of its report or it’s contents. The Astrologers Fund Inc. or its clients often holds positions in the stocks and/or market instruments mentioned and may buy or sell at anytime without notice depending on market conditions and personal financial conditions. This information is in now way a representation To buy or sell securities, bonds, options or futures. This information is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor.

Always check with your licensed financial planner or broker before buying or selling on the recommendations of The Astrologers Fund Inc.


Henry Weingarten

Editor:

Henry Weingarten is the Managing Director at The Astrologers Fund, Inc. He was the founder of the New York School of Astrology and the NY ... <Read more about Henry Weingarten>


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