The election is today, so here is a clue as to what is going to happen.

BY ANDREW GIOVINAZZI

November 5, 2024

Yo Pit Crazies,

All the betting lines moved closer to 50% for the 2024 Presidential Election. They did not go dead even and the amount of “misinformation” that is going on means someone is worried. The rhetoric is getting down right horrible with 1 day to go. I do not recall growing up when a news media company would post just a phrase or sentence and take it out of context and call that newsworthy. That happens with alarming regularity now and is appalling. It very much adds to the poor sentiment and the feeling we are losing faith in mainstream news.

I for one will be happy when this election is over. Voting for someone should not be this tough as the USA has prospered under most administrations. Things go wrong then bounce back. Did you know Aaron Burr shot Alexander Hamilton in one of the first, early political feuds between the Federalist and the anti-Federatlists? I don’t think it will come to that but the market has priced some oddball results for a while. At least the thought of a result.

The Mystery Chart

The Mystery Chart above has some fits and starts and peaked last week on Halloween, and since then has sold off. This ticker was the subject in a two-way trade for Pro last week and we got a little payday today.

So what is this product and how does it work and how by gosh will it tell us how the election is going.

This is a chart of the Proshares Ultra Short Term VIX futures ETF (Ticker: UVXY)

The biggest issue of this election is the “tail risk” problem of some goofy thing happening, no winner, nullifying the election of some other tin foil hat item. UVXY is the 1.5x short VIX futures ETF. When the dust clears and the volatility reprices post-election this product should be $22, currently trading $28.

I expect UVXY to drop below the 50 day moving average like a cannonball through a woodshed roof. I would know that since I just built one. A woodshed not a cannonball. Pricing the tail is something the market does, but it also reduces that price after the event. That will smoke UVXY right up in flames.

This one election, the most important blah blah, should go like all the others or the USA drifts into the realm of banana republic. I think UVXY getting smoked is more likely.

To Your Trading Success,