Biden Dropped Out of The Election
This weekend’s political news cycle was certainly eventful. And I think it has major ramifications for the entire stock market…
For those of you who missed the big news this weekend: Just a week after Trump’s near-miss assassination attempt, Biden announced he is dropping out of the election.
This election was already going to be dramatic and volatile but an open convention in August for the Democrats would be WILD.
To be fair, I think they’re more likely to arrive at a consensus (presumably behind Kamala who Biden already endorsed) than to still be waging an in-party war by then as it’s probably the only chance they’ll have at winning the election.
I do have to admit that an open convention would be a must-see spectacle!
Personally, if I were the DNC, I would be calling Robert F. Kennedy. Jr and begging him to come back to the democratic party (spoiler: they won’t).
You see, he first wanted to run as a Democratic candidate and the mainstream Democrats did him so dirty that he officially left the party and is currently running as an independent.
But regardless of what they do, I don’t think it changes the high probability of a Trump victory in November.
Don’t get me wrong: There is something to the strategy of throwing another candidate in the race at the last minute and giving voters a “honeymoon phase” before all the real stuff hits the fan. That could play well for whoever the candidate is…
But overcoming all the baggage they’ve carried to this point and the seeming momentum that Trump has is an incredibly tall order in my view.
I won’t go deep into my political thoughts right now other than to say this:
Biden stepping down feels like it had to be the plan all along (which many have said as much going back over the last year) and doing it this late in the cycle and invalidating the primary voting is a pretty blatant stiff arm of the democratic process.
Regardless, I think it will shake up the probabilities of the election in one way or another and there’s no doubt money flowing into stocks and sectors will reflect that.
Let’s say, for example, the Dems passed on Kamala at the DNC and brought in someone whose biggest issue was green energy. Even if this imaginary candidate had a relatively low percentage chance of winning, you’d see the market flow into some green energy stocks simply due to the potential.
Or consider if the Dems brought someone forward who was against the US aiding the current global conflicts. Imagine the money flow into defense stocks if the consensus was that both candidates wanted to avoid any conflict!
These are just simple examples of how the political landscape could impact specific stocks and sectors.
The truth is, markets flourish most when the government is at a standstill. Because nothing changes and that means stability for the markets.
And the markets opened up pretty well today after this weekend’s news. The S&P was up about .66% midday, the Dow was up .014%, and the Nasdaq Composite was up about 1.08%.
Will it stay up or will it tumble? Right now, I don’t have a strong directional bias in the short term. (However, I am still bullish longer term until we get a major breakdown)…
But one easy way to get that bias is to simply draw a box around Friday’s candle from high to low. If we break the high, it’s a high percent chance we’ll have a bullish week and if we break the low it’s a high percent chance we’ll have a bearish week.
Roughly like this:
Now, this certainly isn’t foolproof, but it gives you a barometer and a way to actually plan your trading rather than just being along for the ride.
I’ll update you with some more actionable ideas as we go along this week.
—Nate Tucci
P.S. If you haven’t checked out my Jump Trades presentation I highly encourage you to catch a replay right here. I am going live again tomorrow afternoon to talk Jump Trades and give a potential trigger targeting around a 200% gain.
