E US Election Market Forecast

There is a hypothesis going around (and some may even argue that it is more than just a hypothesis) that if Clinton wins the US presidential elections today, the markets will rally, and the opposite would be true in case of a Trump win.

So, what if we take the converse of that logic and pose the following question: what if you knew that the markets would either rally or slide right after the elections, would you then be able to draw a conclusion about who would win the elections? Let's explore that further then.

Below is our US equities forecast from mid-October to Nov.10th plotted on the daily SPX500 chart.

First of all, and as you knew from my previous article, US equities followed their forecast very nicely and experienced their longest slide since 1980 according to the headlines we saw and heard everywhere, and that decline was over by Friday, Nov. 4th, also as forecasted.

Needless to say, we made 219% in profits on the second leg of that decline, bringing our total profits on our short equities position since Oct. 24th to 341%, which we are not complaining about.

Now, what is interesting about the Nov. 4th reversal is the details of its unfolding. To understand what I am talking about, have a look at the forecast as plotted on the hourly SPX500 chart.

This chart went out to our clients Sunday night to shed some light on the details of the unfolding of the forecasted reversal. As the chart shows, the forecast had predicted something to take place over this past weekend, which would cause US equities not only to reverse to the upside but to actually witness a huge surge when the markets would open in Asia Sunday night (in New York time).

Sure enough, on Sunday, the FBI announced that they had cleared Clinton from any wrongdoings with respect to her latest emails and the markets opened in Asia with a huge gap up, which was followed by the strong rally that everyone now knows about.

Now, the daily forecast shows the rally continuing for the two days following the elections. As such, and if the above hypothesis is true, that could very well suggest a Clinton victory!

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Charles Howard 3 years ago Member's comment

I love how you flipped this on its head. You've proposed a fascinating hypothesis.

Gil Richards 3 years ago Member's comment

Yes, it's a fascinating theory - if we know the markets will rally or slide based on who wins, and if we can predict if the markets will rally, we can infer who will win. If one way is true, so might the other. But it's making my head spin.