Republicans could make a clean sweep.

PRE-OPEN MARKET COMMENTS WEDNESDAY – Trump won the election handily and it’s been a long time since Republicans won the popular vote. They flipped the Senate and it’s possible that they retain control of the House. The market is making a new all-time high and much of the move this morning is a relief rally. I referenced this pattern over the last six elections in my comments yesterday. The biggest market threat in my opinion would have been a dead heat with recounts and uncertainty. The debt ceiling has to be raised this year and a clean sweep would mean that this process could be relatively painless.

No matter the outcome, half of the country was going to be disappointed. We’ve seen four years of each party and this is not going to be the end of democracy as both sides have claimed. There is a huge demographic shift in the parties and that is worth noting. I’m not going to get into those specifics because you can research those changes yourself.

Don’t listen to the analysts and economist. These people are consistently wrong and many are politically biased. Don’t guess which sectors and groups are going to do well, just follow price. There are going to be many “knee jerk” reactions this morning. Don’t FOMO into trades. There will be plenty of time to enter trades and Trump is not going to take office for two months. I traded during Trump’s first presidency and I can tell you that there is going to be volatility. As a trader, I look forward to it.

We are going to keep track of his press conferences, but sometimes his “off the cuff” remarks will move the market. He will say things like, “I’m going to impose 20% tariffs across the board for China.” The market will react and then he will say, “Maybe I’ll raise them to 40%… they’ve been ripping us off for a long time.” The market will react again. Then he will say, “Xi and I have a great relationship, maybe we can work things out.” The market will react again. The volatility will be the greatest in his first six months of office and then the market will start to get used to the rhetoric.

The FOMC Statement is tomorrow. The biggest concern was the drop in jobs last month and the downward revision. The hurricanes have ended and the reconstruction is underway. Boeing announced a deal and that strike has ended. Some of this drop in jobs was temporary, but I sense that labor conditions could be softening.

Gaps up to a new all-time high are often faded. The risk of an over-reaction and a gap reversal will come in the first 30 minutes. If we see long red candles right away, be patient. That would be a sign of heavy selling. If the market shoots higher and it never looks back, you have to be willing to let it go. There will be a dip after two hours and you can buy that dip if the price action is strong (Gap and Go). These would be extreme reactions. A more likely scenario is that the market opens with a bang and the bid is tested. A brief and shallow dip would be a sign that we are going higher. A test all the way back to $585 would be a sign that there is some selling pressure. That would still preserve more than half of the gap and that is fine.

When the dust settles, I believe the market will grind higher. I will be entering starter swing longs the next few days. The buying pressure has been building for a quarter and we are in a period of seasonal strength. Earnings have been good and with the market at the same level it was at in July, valuations are more attractive. There is less uncertainty now that we know the outcome of the election and it’s more likely the debt ceiling will be raised without any delay.

Support is at $585. Resistance is at $600. That is a nice round number.