Editor's note: This article originally appeared at 6 a.m. on Nov. 8 on Real Money, our premium site for active traders. To get great columns like this from Jim Cramer and other top columnists earlier in the trading day, click here.
Can you believe it? Election Day has finally arrived. Many are questioning whether it will end when the polls close today. Many feel it won't.
So I did an exercise: I went back and looked at just a few statistics in the post-2000 election.
Let me report that the market was overbought heading into Election Day 2000; it is oversold now. Heading into the election of 2000, the 10-day moving average of the put/call ratio was low. It had moved down from 80% to just under 60% as we got to Election Day. Today it is on the upswing, coming off a low reading.
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Those are just two quick looks, but my point is that the indicators then were set up for a post-election decline and now they are not. Now we see the market at an oversold condition. Recall the Overbought/Oversold Oscillator is the 10-day moving average of the net of the advance/decline line. For seven of the last 10 days, the breadth was negative; that makes the oscillator oversold. No matter what the market does, this indicator won't miraculously move to overbought.
Yes, it's possible that we get an oversold market that gets more oversold, but the setup is different now than 2000.
Speaking of breadth, the NYSE saw its best breadth since mid-September. The net volume was the best we've seen since July 8. What's more interesting is that just over 90% of the volume was on the upside (for the NYSE; not so for Nasdaq). The last time we saw that was July 8.
You know by now that it has been my contention that the majority of stocks topped out in mid- to late July, when the McClellan Summation Index started heading down. So even if you're bearish, note that after that July 8 volume reading, there was still over a week to go before we saw the market get overbought.