What is up for the markets until Nov. 4th

What is in store for the markets over the next few days/weeks before the election?

First, it is clear that nothing is stabilizing the markets since all the rallies have been used for more selling as hedge funds and private investors continue to withdraw their monies from these investment vehicles in unprecedented amounts requiring selling without regards for fundamentals. These redemptions are what is keeping a cap on the rallies of late.

Second, as it becomes more and more clear that a BHO/SMDC is going to be elected on Nov. 4th, the markets are going to realize 2 things:

1. Taxes of all forms are going to go up on all taxable entities

2. Regulation of all forms is going to be increased on all financial entities

This will cause the markets to take pre-emptive action of selling more stocks while the cap gains rate is still low and the regulations are not as restrictive or invasive.

Third, the Federal Open Market Committee (FOMC) is going to cut the Discount Rate and Fed Funds Rate by 25 bp on their Oct. 29th meeting next week. This will produce a small pop in the markets, but will fizzle on Thursday/Friday before the election.

Fourth, depending on the size of the BHO/SMDC mandate on Nov. 4th, the market will sell-off accordingly; however, due to the fact that the election uncertainty is over, the market may pop on the Nov 5th and then sell-off the 6th and 7th. Watch the futures on the evening of Nov. 4th.

Fifth, if a BHO and SMDC is indeed elected in a landslide expect the markets to begin rebalancing from Nov. 4th to Jan. 20th, 2009 when the SMDC come back to work and begin their new work in earnest. With a SMDC, the counter-balance of an opposition party will be eliminated, and the liberals will be in total control of the government with the ability to enact any type or level of invasive legislation they so desire. It will be 2 years before the American voters will get a chance to undo what they stupidly and impulsively will do on Nov. 4th.

Wow! that's a lot to understand, but keep reading and learning.