NEW YORK ( TheStreet) -- For market-watchers, the last week of October was a bit like waiting for a tornado in Kansas. You know that a twister is about to touch down on a plain... but you don't know where or when.
The quietude is entirely due to three items: (a) mid-term elections on Tuesday, Nov. 2, (b) Federal Reserve quantitative easing (QE) policy announcement on Nov. 3, (c) lame duck Congress tax policy prior to 2011. The markets expect Republicans to win the House of Representatives and hope the Fed will deliver "enough" QE to help the economy. Anything less may be an excuse for profit-takers.
The wild card is tax policy. I believe that the White House has only priced in the Administration's party line stance. Yet the greater likelihood is a willingness to temporarily extend the Bush tax cuts in full or at least an Obama olive branch to compromise more on taxation. I could be wrong. Yet a better tax scenario is likely to boost risk assets dramatically into the close of the season.
So where should that sidelined cash go? You have to look at the momentum that technology stocks are garnering in the final quarter of 2010. Whereas the popular Dow and S&P 500 benchmarks have been unwilling to set new 52-week highs, most Tech ETFs have already surpassed their April peaks.