Home > Psychology > Election Day 2008

Election Day 2008

Elections are finally over, and so is October… Markets are taking the end of the campaign trail very nicely, as least today. We are also getting a break from the VIX index as it traded below 50 today.

A couple of main points will dictate the flow to this market in the short/medium term. The election has for the most part been priced into the market, what is still pending is the number of democratic Senator the congress will have. That will be the 1st catalyst in this market, depending on how the market views the political make up of this country; Portfolio Managers will start allocating money to different sectors accordingly. Calmer markets and the lack of new bankruptcies in the financial sectors is causing cash that is on the sidelines to start coming back into the markets – cash on the sidelines is the 2nd player in this markets.

On the negative side we have company earnings, which are tied to the economy, and the unemployment rate that has been going up every time we get new layoffs in companies across various sectors.

For us intra day traders will like to see these markets find the institutional investor that will supply to consistent flow for us to participate with them. The overwhelming uncertainty these markets have had recently has been really difficult to find the order flow to trade with. Those panic sell off as well for redemption purposes also confused the issue. We need clarity in order flow to benefit consistently by looking for high probability trades.

Under these market conditions traders need to know when to trade, and when to stop. Today for instance most of our traders made money in the morning, when the order flow was easier to follow. Lunch time was very choppy, as it normally is; best to stay away from markets during these periods… as somebody says sometime the best position is to sit on your hands.


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