[OP Ed. Note: This Editorial Was Drafted Without AI]
Yo Pit Crazies,
Well, there was a giant blue wave in the election, and the S&P 500 Trust ETF (SPY) didn’t tank like Brazil did last week.
The VIX dropped 14% instead. I was surprised by the wave, but of course I live on a rock in Maine and don’t get out much.
The reality is the Republicans delivered on zero of their promises. They spent the same amount of money as the previous Congress and had nothing to show for their work. Healthcare, education and housing costs continue to climb, and they couldn’t even pass a voter ID law that 80% of the people want. So they lost, and now we get to be reminded of what the New Democrats will do. The Republicans do nothing, but the Democrats will for sure push their agenda.
So why didn’t SPY tank? Well, we have a functioning government, mostly, and as much as the Democrats would like to, little can get done if Trump vetoes everything. Border security and the general mad dash for energy independence will still roll with or without Congress. That’ll change in two years, and the President can try to right the ship. A generational opportunity was wasted.
1-Month SPY Chart
Traders started picking winners and losers, and right now data centers and chips are giving up the ghost. Utilities are off 50% from their highs this year. Yet SPY is only about 2% from the top.
The market is still about growth
The AI boom is still taking shape, even if some data center Luddites are doing the bidding of the PRC misinformation campaign. All of a sudden the Mag 7 look good because they spent on AI access and others didn’t. It was a huge turnaround. The VanEck Semiconductor ETF (SMH) got smoked even as the chipmakers turn in crazy numbers.
MAGS 1-Month Chart
Post-election, investors saw two years forward
Investors see gridlock. Generally that’s better for stocks, since that’s been the self-imposed action of the last two years. As the last two years have shown us, doing nothing is better than doing something stupid, unless you’re a pol who wants to get re-elected.
I expect the VIX in the low 15s again this week.
If you want the stocks for 2027 that’ll benefit from the new regime, Mark starts trading Cycle 11 on Monday. It’s a 60-day post-election book, and all seven of us are feeding him trades for it.
I hope this was helpful,
AG