Government Run Markets

When we coined the term government run markets, we were basically talking about central banks, both here and around the globe. Little did we know we would have to include the FBI.

Tonight, the FBI turned tail again (are you dizzy yet?). We will leave that for another day. As we write this, Dow futures are up 200 but can change overnight. They are up because in the very short run, markets are happy when Hillary Clinton looks like she is winning. But one thing is wrong. Hillary Clinton has been leading in the polls for the past 9 days as the market went into nausea land. We’ll know a lot more after tomorrow night…finally.

If markets react well to Miss Hillary in the short run, it is because she would continue the easy money spigot. That’s all. But be careful about becoming euphoric. Notwithstanding tomorrow’s gap to the upside, they were due to bounce anyhow as markets have become about as stretched and oversold to the downside as they typically get. So slow your roll.

The fact is the tape is a mess. Many leaders have been trashed and a ton of areas are in their own bearish phase. We remain defensive and cautious regardless of what may or may not happen tomorrow.

To accentuate the positive:

Financials still do have the relative strength. This will be vital to continue. On top of that, we like the recent action in the transports as they look like they want to go topside from this range. Look no further than plunging oil prices for the why. The oft-mentioned semis continue to act well but careful here as they have had a long run and now trade below the 50 day average.

We will have a lot more tomorrow on the election as well as the market.