Nov

6

 One has to believe that the realization that we will be living with the idea that has the world in its grip from the executive office for another 4 years will become accepted today with the exit polls and that a certain revulsion will take place. Yet stocks are still very low relative to the fed model for all time frames so that the revulsion should not be catastrophic.

Rocky Humbert writes: 

As I have previously demonstrated with regard to the monthly job reports, EVEN IF one can predict the data, it is impossible to consistently predict the terminal market reaction with any statistical significance at a given/terminal moment in time. And making predictions that X price will be hit (when X isn't statistically significantly far away) is an empty statement. Hence I submit that The Chair should acknowledge that his comment below is an illustration of a statement that cannot be wrong. At any given moment in time, there is a high probability of some revulsion. 365 days per year. And the definition of "catastrophic" is a function of leverage, not price. And that stocks are low relative to the fed model is an empty statement unless he believes that bond prices cannot go down. Lastly, the Average True Range of the S&P is currently about 15.5 points. So any statement that predicts a move of up to 15.5 spu points is most likely to true. I'd say that one needs a move of more than 31 spu points to be "revulsion."

But for proof and in the Franklinian spirit — I will send a unique prize of dubious monetary value to any Spec who can predict BOTH the winner of the presidential election AND the closing SPX price for tomorrow (Wednesday) within 3 SPX points. All submissions should be mailed to the speclist.

HOWEVER, I will make a final prediction. IF Romney wins. And IF Wednesdays close is more than 16 points below today's close, then there will be a very substantial decline between now and year end. How substantial? Enough for the Chair to call "catastrophic."


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