Market Will Drop Below the 200-day or Rally Above the 100-day Wednesday

Posted 9:40 AM ET - The day we've all been waiting for is finally here. All of the mud-slinging we've had to endure for the last 18 months will subside and the nation will pick one of two distinctive paths. Hillary Clinton is a known commodity and we can expect the current conditions to continue if she is elected. The market knows what to expect from her after 30 years in public office and we will see a small relief rally tomorrow if she wins. The SPY will rally above the 100-day moving average and the price action will stall by the end of the week. Traders will wait for the December rate hike and the Fed is likely to raise rates. Donald Trump is an unknown commodity and he represents uncertainty. He has battled Democrats, Republicans and the media. The market doesn't know if he will be able to get his policies approved by Congress. If elected, the market will drop below the 200-day moving average and we will see brisk price movement and increased volatility. The Fed will not like the backdrop and they will postpone the rate hike in December if Trump is elected. It is critically important for you to understand that I'm not making a political statement. I am simply telling you how the market will react to the voting results. This is a binary event and I urge you to keep your overnight positions to a minimum. The Senate and the House will also have close races. I believe Republicans will hold the Senate by one vote and they should retain a comfortable margin in the House. We will see position squaring today and the action will be muted. I will wait for the market to establish a direction and I will be very selective with my trades today. I only need three or four good winners and I plan to skip the afternoon session. Even with the massive 40 point S&P rally yesterday, I made all of my money shorting stocks. This is possible because my trading system identifies a particular pattern and I use relative weakness as my edge. After the initial market surge, prices compressed. Stocks that wanted to go down were easy to identify and they started leaking oil after couple of hours of trading. I had to be very patient and I knew that the market upside was very limited. These stocks had already demonstrated that they wanted to go down so even during a market rally they would not have participated. This presented a favorable risk/reward scenario. I have a very well-defined trading system and this is what we do every day in the chat room. If you are a day trader, take the one-week free trial. The action will heat up the rest of the week and we will be very busy. I hope you voted and I hope your candidate wins. . .

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