This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Post-Election Selloff Is No Surprise

Obama's victory translates into selling because his message to investors was, Hey, it's complicated -- oh, and by the way, you're going to have to pay more taxes.

In all seriousness, that is the only message that got through to this voting bloc. The nuances of Obama's economic, political, social, international agendas . . . a clanging cymbal, a distant wind chime drowned out by the clang of the market's opening bell.

So, after all the waiting, it finally happens. The avatar goes down in Round 3. Obama wins.

How do all the investor guys feel? They saw Romney -- they saw themselves -- winning and it didn't happen. They lost. They're angry and feeling let down and all their friends feel angry and let down.

They start throwing things. They throw tech, they throw energy, they throw China, Europe, transports, health care. All of it.

They explain it calmly; oh yes, they can rationalize. But it's not a rational reaction. It's a tantrum and like all tantrums, born of fear.

So what happens now? My guess is volatility continues, but we've established a floor. Take a look at the Nasdaq.

^IXIC Chart ^IXIC data by YCharts

It could go all the way down to resistance at 2850, but for that to happen I think we'd need a piece of tangible bad news, not just suspicions. The more realistic outlook is a floor above 2900. We got that Wednesday.

Mind you, if there were something wrong with the fundamentals, that kind of simple analysis wouldn't work. But this isn't about fundamentals. It's pure investor psychology.

So volatility will continue. The peak of the tantrum is over, but the crying and stomping and the slamming of doors will continue into the weekend.

But by Monday, a grim, calm, disillusioned, adult demeanor will be restored. The focus will shift to work, to the coming holidays, to the end of the fourth quarter and the careful rebalancing for the long haul, a rebalancing that had to happen anyway.

Yes, the "fiscal cliff" will create some uncertainty. But not enough and not for long. Speaker Boehner is already running to bring the president, the House and the Senate together to hammer out a solution. He is motivated. Tea Partiers are chastised. All parties want a compromise.

By Tuesday, the sore feelings will have eased and reality will have set in. Expect the jitters to ease and the hard work of growing into the year end to begin.

--Written by Carlton Wilkinson

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
YHOO $44.13 -0.69%
AAPL $124.25 -0.14%
FB $81.66 -0.67%
GOOG $542.56 -0.99%
TSLA $187.59 -0.63%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs