Buying Opportunity?

US indices are offering a fab opportunity!

Yep, I was mistaken about the Midterm results.

I believed the new voters, women, those under 30, new citizens would overcome the Trump base votes. I was wrong about the Senate where the Democrats lost ground.  I made a better assessment about the House where the Democrats gained control.

The question posed to me yesterday was whether the market would view the result as:

• Creating the potential for a gridlock – markets head South or
• A relief rally, focusing on historical trends of a divided Congress – markets head North.

The two charts below show US stock market history in times of a split congress. (See taken from “why-stock-market-bulls-insist-gridlock-is-good“).

Note that chart 2 suggests that 2019 will be an up year. Indeed, the year following the midterm elections shows a spectacular 20%.

By 9:00 am (UK), it was clear to me that a rally in US indices was the probable result of the midterm.

So why do I say there is a fab opportunity? I’ll leave that till tomorrow.  For today, note that the FOMC setup comes into play.

Buying US stock indices at the open and exiting by 13:55 (EST) on FOMC day has produced a 36.15% ROI. I’ll leave it to you to determine where best to place your initial stop.