The bellwether stock index has declined for 9 days in a row, the first time it has done that since 1980. Scandals and nonsense and a lack of clarity in this election cycle have caused this latest stock drift. Doomsayers are warning us to brace for impact. We think otherwise, and history is on our side.

Let’s look at the situation in 2 ways: Near term and intermediate term.

Something has to break with this losing streak and I am pretty sure I read somewhere that the day before Election Day is almost always an up day for stocks. With Democratic nominee Hillary Clinton now cleared of all charges by the FBI (shocker), that should lift the gray cloud overhang on stocks.  Even with some ambiguity on how things will shake out Tuesday night (and we don’t think it really is that close), the low RSIs on the S&P 500 Index and NASDAQ Composite (both at 28) will serve as a buy signal for some traders.

Courtesy of Factset, check out these stats:

For you Clinton supporters...when the a Democrat replaces a Democrat in office, the market has risen by 9.8% in the first year in office.  When a Republican follows a Democrat...stocks dropped by 10.2%. Ouch.

Going back to 1992, the S&P 500 has risen in all Election Years (plus one), with consumer discretionary stocks rising an average of 19.9% and all sectors have averaged a 13.5% gain.

The Stock Market Today

After spending time with friends celebrating their 69th wedding anniversary, it made me nostalgic. With all of the fractures and consternation in this election season, I thought it would be an opportune time to serve as a reminder we still look out for one another.

A group of drunken bachelor party participants left their hotel in the middle of the night to get food across the street. On the way back they noticed a guest trying to commit suicide. As drunk as they were they alerted hotel management and security. Just as he was about to jump security burst into the room, ran onto the balcony and saved his life.

An immigrant to this country was so moved by the plight of our veterans that she volunteered twice a week at a local VA hospital. She built a friendship with a Korean War veteran who later passed away. The family was so grateful that the woman likely extended the man’s life because of her friendship that they bought her a car. You see, in order to get to the VA she had to take 2 buses and travel 90 minutes each way in cold, rain, snow, heat.  One of her children proudly serves in the military today.

A Filipino woman answered an ad and took a housekeeping job in a foreign country. After she was picked up at the airport and brought into the home her passport and all of her belongings were taken. She was a slave for months. No pay, no escape, a hovel for living quarters and scraps for food. One day the man of the house left a laptop open in the kitchen. The woman took a chance, contacted a friend on Facebook and arrangements were made to whisk her out of the country and back to the Philippines.

Say What?

Great info, insights, and hard-hitting stories make up this week’s Say What? feature...

The New York Times


Much needed comic relief.

The New York Post


I know you know this, but thought you should know. Ya know?

24/7 Wall Street


There isn’t just a vote for President in some states this year.



We don’t talk about it much but investors can no longer avoid the inevitable.



A new take on an old whipping boy.

Notable Numbers

AAII Sentiment Survey (figures rounded)

  Current Last Week Long Term Avg
Bullish 24% 25% 39%
Neutral 42% 41% 31%
Bearish 34% 34% 30%

Clearly, individual investors did not know what to make of all the craziness last week and it was evidenced by an almost negligible difference in the week to week survey results. On the pro side, the Investors Intelligence Bull-to-Bear ratio took one of the biggest weekly hits we have seen in months. The ratio, which had been fairly consistent for months with limited exceptions, dropped by 15% last week, as compared with the prior results as investment pros must have been wringing their hands and pulling out their hair.

Regular readers may have noticed that we have paid particular attention to the weekly Lipper Fund Flows data as the figures have been off kilter of late. For example, a week ago, equity fund outflows, excluding ETFs, jumped $20.2 billion—many times more than the recent weekly average. This week, taxable bond fund outflows were $7.7 billion. This decline follows 2 consecutive weeks of inflows which were preceded by only nominal outflows. Obviously investors are concerned about inflation and yield and these outflows also have probably impacted the recent market drops.

Speaking of market drops, last week’s declines were most noteworthy with respect to share volume, which for a few days were slightly higher than normal. Not a good sign,, but as we mentioned earlier, we view it as a short term situation with positive turns right around the corner. Considering that Q4 reductions in EPS estimates by Wall Street analysts were the lowest in 2 years, we could have a pretty decent quarter—especially with the expectation that many companies could enjoy favorable comparisons with 4Q15 results.