The S&P 500 has barely moved over the past 24 hours. Clearly, stock traders have found the perfect equilibrium price where stocks are fairly valued, and everyone is happy. We can all now close our trading screens and go do something productive with our time, secure in the knowledge that the US stock market is free and fair, enlightened and efficient. Wall Street exists to help us grow and secure our wealth, and is always looking out for our best interests. As are government policymakers. As is the Federal Reserve.
All is well.
And on this election day we awaken secure in the knowledge that everyone who wants to vote will be able to, everyone’s vote will be counted: Congressional districts are drawn fairly: so as not to favor a particular political party, democracy will prevail, and all will accept the results of a free and fair electoral system.
Never mind that one political party bent on preserving its electoral advantages is suing to have thousands of mail ballots excluded in Pennsylvania. People should know to put a date on the outside of the envelope.
Yes, democracy will prevail.
Or maybe it won’t, and we’ll all find out how it is to live in a Brave New World.
What does that have to do with the stock market? Absolutely nothing. Day to day, it’s noise, and yes, the stock market jumps and swoons on the noise, but for the trend, the really big trend, only liquidity matters.
On the other hand, in the day to day world that short term traders deal with, and on which we focus here, liquidity is not determinative. Here it’s just noise and cycles. And it’s difficult to distinguish between them. Sometimes the noise is pro-cyclical, and sometimes it’s counter cyclical. Normally the market settles back into its daily and intraday cyclical rhythms after noise causes distortion, either with or against the direction of the current phase. If we do our homework correctly, more often than not, we should be in a position to take advantage of the noise driven moves, by fading the distortions.
Today, the ES 24 hour S&P futures face the prospect of a 5 day cycle high and downturn, at or below significant resistance at 3830. However, the 5 day cycle projection points to 3840-45. That would break the trend resistance. If the market stays above those trendlines, and is above 3825 at the end of the day, the next up phase should extend, perhaps as far as the early November peak of 3915. But if they roll over here, then they’ll probably go back to 3700.
In either case, the setup doesn’t call for a big move on or after election day. The free and fair market is in perfect equilibrium.
Big picture stuff below.
- Swing Trade Screen Picks –100% Buys – Yikes! November 7, 2022
- What To Do About an Anxiety Ridden, Conflicted Market November 7, 2022
- Bad News for the Markets – Not Just Withholding Boomed in October November 3, 2022
- Surge in Withholding Tax Collections in October Indicates Faster Jobs Growth November 2, 2022
- Signs of an Intermediate Bottom in Gold Falter November 2, 2022
- Bear Market Isn’t the Mirror of a Bull October 31, 2022
- We Can Now Project When Fed Will Pause, But Not Reverse October 13, 2022
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