Election Resolved and Market is Down

Pre-market futures are down and indicating that the upswing is rolling over. Earnings Season continues to move along in the winding up stages with several companies beating expectations and several companies missing expectations. Employment trends continue to be soft and tomorrow's Employment Report is expected to show job losses. The main focus of traders is on the election results, which have tipped all balances of power to the Democrats. Traders are working through what this means for the stock market next year. The initial trading is to the downside, and the gap down will probably mean about a 65% chance that the current upswing is done and rolling over.

The market will continue to mull over news like the LIBOR still showing a divergence from the Fed Funds Target Rate (albeit the gap is closing a bit). Traders will chew on Earnings and Economic Reports and watch the global financial crisis. But more than anything, traders will ponder what the elections mean to policy-making. Will the energy crisis take another leg down? Will capital gains taxes go up and companies sell assets and cut back now before the end of the year? Will income tax go up and cut into consumer disposable spending? Or will the new policies be market-friendly and give the market a boost to the Bull? These are all things traders will be keeping an eye on from time to time, as the news hits next year and beyond.

For now, the technical move is indicating a rollover. It may still be that the Dow holds up and reaches for resistance in the 9,800 area, but the probabilities are considerably diminished with the pre-market futures down as much as they are. I will still be playing intra-day swings while the volatility and uncertainty continue.