| | | | | It doesn’t necessarily deliver one political state or another. It can yield socialism, fascism, communism, or any other ‘ism. And for a while in this country, it yielded a reasonable degree of individual freedom.
Without severe constraints, democracy provides just another route to tyranny.
And, to me, the fault lies in democracy’s “Original Sin.”
But perhaps you’re not here for political ontology. You’re here to trade and make money. You want to ride the chaos wave to profit, not hunker down in a metaphysical bunker.
Well, in that we agree. Theoretical seeds cast upon the ground will fall only among thorns unless you take care of today first.
So, I’ll save the philosophy for another day and go straight to how I think the election will impact markets.
Kicking a Fat Man in Front of the Entitled, Snowflake Zombie Hoard
In my view, democrats spent the last several years overplaying a remarkably weak — and in many ways absurd — political hand.
They scream “SCIENCE!” but I don’t think that word means what they think it means either. Science, too, is a process. Not an established body of talking points masquerading as knowledge.
As a result, Republicans will take both the House and Senate thereby deadlocking the legislative process for the next two years.
Which works for me for now. In a world of lesser evils, I’ll take evils eating each other.
The most significant market implication of choking government on itself is “no fiscal stimulus.” Republicans will use this opportunity to let the Federal Reserve do its work for as long as it costs Biden a second term.
And they won’t contradict hawkish monetary policy with more spending from the government.
Thus, the stimulus addicted stock market will have even less monetary cocaine to get it through tomorrow.
Another result of deadlock could be negating Biden’s goal of crushing the oil patch. This, you could argue, will let investment flow into energy. But policy uncertainty still looms too large. And, besides, no new money leaves too little money to invest in any case.
We’re still on the recessionary road no matter what party is in charge. And, for the moment, Republicans strengthen their hands by doing nothing to get us off it.
But that’s the big picture. To chart a path through chaos, you focus more on the moment and less on the destination.
And I just built a tool to help you see every moment in the markets the way I do.
Navigating Chaos
I started mentioning this tool a while back.
It's the culmination of several months of work and it has been very well received.
It's called the Opportunity Zone Scanner and it lets you isolate only those stocks that are in the precise "zone" that I look for. Because when stocks are in this zone, I've noticed that they're primed to make big moves.
Not only that — but included as a bonus is a whole separate tool (the Opportunity Zone Indicator), because the scan is just the start. Once you've isolated these stocks, you can use the OZ indicator to see what’s really happening with the stock right now.
Just last week, when the Fed announced their latest round of rate hikes, the tool proved its worth when the S&P traded right up to the Opportunity Zone before slamming down hard in the opposite direction.
It was a picture-perfect OZ setup. And this is how it played out: | | | | | |
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