Halloween is over but the US election is beginning to scare everyone. It has become the most acrimonious, contentious election in US history, between two flawed candidates that are each loathed by over 50% of the population. Never in US history has that been the case. Yet one of them should become the next US president – unless it is a hung election, which remains a possibility. If that happened, then the real nightmare would begin.

Irrespective, the current election has already turned into an American nightmare.

A Glimmer of Hope?

The recent GDP numbers are suggesting that things are better than people think they are. But as usual, underneath the numbers, things are not that great after all. Yet economists, the US administration and the Fed use these numbers to justify how well the economy is doing, and tell us that behind the gloom, there is a glimmer of hope.

As usual, we dispel some of those myths. And really, what else are the Fed and the administration supposed to say.

If they were gloomier, they could panic the markets, and it is paramount to keep the US stock market up.

The November FOMC

To no one’s surprise, the Fed left interest rates unchanged at the November FOMC. And as expected, they kept open the window that they might hike in December, if conditions warrant. We wonder if the Fed is concerned about the election outcome as well. Nonfarm payrolls and the employment numbers are out on Friday by the time the “Gryphon” is released. Watch them carefully, and we will review them next week.

Weekly Market Review Stocks

Uncertainty over the outcome of the US election has helped push the Dow Jones Industrials (DJI) below 18,000 and the S&P 500 below 2,100. We note how the small cap sector has been leading, as the Russell 2000 and the S&P 600 are well off their highs. The US stock market has the potential to return to the lows of January/February 2016. But key support levels remain below and depending on the outcome of the US election the market could fall further or start to rebound.

The stock market hates uncertainty, and recent polls for the US election have turned what everyone thought was a Clinton victory into a toss-up. Wall Street has voted, and their preference was Clinton.

Bonds

The US bond market, represented by the iShares 20-year Treasury Bond (TLT), has broken both trend line support and the 200-day MA support. It could fall further, or find support. We outline the many and varied reasons. We examine longer-term cycles for bonds, and note that we could be in the throes of making a 3-year cycle low.

Bonds have an excellent record of making 6-year cycle lows. The 6-year cycle breaks down into either three 2- year cycles or two 3-year cycles. This could be the latter, as the last recorded 6-year cycle low was seen in 2013. Some good charts.

Currencies

We have mused as to whether the US$ has topped. Triple tops are rare, but the recent high fell just short of two earlier tops seen in 2015. We still need to break out over 100 to confirm higher targets. But so far, this is only a pullback within the context of an uptrend.

Gold and Precious Metals

Gold, silver and the gold stocks enjoyed a strong up week thanks to the uncertainty surrounding the US election. Gold is now testing resistance at $1,300. But the key level to take out is at $1,340 in order to suggest new highs above $1,377. We note some slippage in the commercial COT.

We also look at gold in other currencies, and note that gold’s performance in other currencies has been stronger than it has been in US$. Yet everyone is focused on gold in US$. Here in Canada, we are only 13% off the all-time highs. Gold’s performance in Cdn$ has been strong, yet again we focus more on gold in US$. Maybe we should focus more on the performance in our home currency, and we would realize how well it has done.