Saturday, November 3, 2012

This Could Happen Again!

With two trading sessions left before Presidential Election, traders are positioning themselves for the outcome. But very few of them, if any, are prepared for the worst scenario - no winner for days, weeks, or even months.
In 2000 it took 35 days and Supreme Court decision to stop perpetual vote recount. During that highly contested election - when "dimpled", "pregnant", and "hanging" paper ballot chads were scrupulously examined with magnifying glass by Florida judge - S&P 500 lost 100 points in four trading sessions after Election Day, and continued lower into the end of the year.

click on images to enlarge

It could happen again this time. According to the latest voting polls, the candidates are currently locked in statistical dead heat, especially in "swing states". It is very possible that many traders ran for the exits on Friday due to this uncertainty.
Be prepared for this scenario and have a plan of action ready.

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