Our mean reversion strategy has reached the point where a low risk entry point can be made but we continue to wait. Rising poll numbers and increasing odds for the Republican candidate continue to put pressure on US markets. Markets can continue to increase their oversold status by becoming more so but that may also mean a stronger resulting rally.
Should the Republican candidate win next week I would expect a sharp woosh down in US stocks and the USD. At some point there will be stability where new positions can be established.
Since everyone seems to be concerned with the negatives, there are important positives to consider:
The 50 day moving average of the SP500 remains above the 200 day moving average and GDP growth is accelerating (These are not bear market conditions).
Since the newsletter being sent to clients two days ago our cash position has increased to 50%+.
Should HRC win the presidency I’d expect markets to stabilize after the election. In the meantime high cash levels will be maintaned.