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 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

Follow @CarltonTSC

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