November 06, 2012 at 09:29 AM EST
Election Will Not End Uncertainty.
Tuesday, November 6, 9:25 a.m. Wouldn’t it be great if the bitterness and uncertainty of this election season would end with today’s election. There’s a record amount of cash being held on the sidelines by corporations that might be moved into the economy if businesses could have a reasonably clear vision of what the future [...]

Tuesday, November 6, 9:25 a.m.

Wouldn’t it be great if the bitterness and uncertainty of this election season would end with today’s election.

There’s a record amount of cash being held on the sidelines by corporations that might be moved into the economy if businesses could have a reasonably clear vision of what the future holds in the way of taxes and regulations that they will be operating under. It doesn’t matter all that much whether those conditions would be more favorable for them, or less favorable. The key is that they be able to make two to five-year plans without fear that the rules and conditions they set up for and acted on, will be changed part way through.

Investors have also pulled record amounts of cash out of the stock market that could begin to come back in if not for the uncertainty about the companies they might invest in, plus uncertainty about their own situations going forward. Can they plan on the current tax situation regarding dividends, capital gains, and income, continuing or will big changes take place that will affect how they should invest?

If only today’s election would end those uncertainties. If only we could almost immediately know, based on which party wins, that their agenda will set the conditions for the nation for the next four years.

But there is not a remote chance of that happening.

The election is apparently going to be so close that we will much more likely face continuing dysfunctional gridlock.

And that might be the best outcome we can expect.

There is also the very real possibility of another Bush-Gore type fiasco, in which several key state elections are so close that recounts are demanded, or issues are raised over the counting of absentee ballots and the like, delaying the official results for weeks.

Colorado, Florida, and Pennsylvania conduct automatic recounts if the results are within 0.5%. The latest polls show the candidates could easily be within that degree of closeness. President Bush’s final margin of victory in 2000 was only 0.009%. In states that don’t have automatic recounts a candidate can request one.

So the election is not going to end the politically-based uncertainties, gridlock and bitter contentiousness will continue. And uncertainties would even mount if the results should be delayed and unknown for weeks as happened in 2000.

Meanwhile, markets still will face the uncertainties that are not so much politically-based, like rapidly deteriorating corporate earnings and slowing global economies.

Those waiting out the election expecting it to go a long way toward ending uncertainties for the market are going to be disappointed.

The Uncertainty Shows in the Charts.

The market has gone nowhere since mid-September, the Dow down 4%, and broken down through short-term support at the 50-day m.a., but remaining resilient especially in the face of the disappointing 3rd quarter earnings.

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The always more volatile Nasdaq is down less than 6%.

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Pundits are expecting the election to be a game-changer for the market one way or the other.

We shall see.

To read my weekend newspaper column click here:  Investors Are Not Dumb!

Subscribers to Street Smart Report: There will be an in-depth U.S. Markets update tomorrow in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

The U.S. market traded quietly yesterday. The Dow was down 55 points by mid-day, recovered and was up 47 points near the close, but dropped back down in the final minutes to close up just 19 points.

Volume was light with only 0.6 billion shares traded on the NYSE.

The Dow closed up 19 points, or 0.2%. The S&P 500 closed up  0.2%. The NYSE Composite closed up 0.1%. The Nasdaq closed up 0.6%. The Nasdaq 100 closed up 0.6%. The Russell 2000 closed up 0.6%. The DJ Transportation Avg. closed up 0.3%. The DJ Utilities Avg closed down 1.6%.

Gold closed up $8 an ounce to $1,685.

Oil closed up $.79 a barrel to $85.65 a barrel.

The U.S. dollar etf UUP closed up 0.2%.

The U.S. Treasury bond etf TLT closed up 0.6%.

Yesterday in European Markets.

European markets mostly closed down yesterday. The London FTSE closed down 0.5%. The German DAX closed down 0.5%. France’s CAC closed down 1.3%. Greece closed up 3.3%. Ireland closed up 1.2%. Italy closed down 1.4%. Spain closed down 1.9%. Russia closed down 0.1%.

Asian Markets were down Sunday night and mixed last night.

The Asia Dow closed down 0.5% Sunday night, and up 0.1% last night.

Among individual markets last night:

Australia closed up 0.2%. China closed down 0.4%. Hong Kong closed down 0.3%. India closed up 0.3%. Indonesia closed up 0.3%. Japan closed down 0.4%. Malaysia closed down 0.3%. New Zealand closed up 0.5%. South Korea closed up 1.0%. Singapore closed down 0.4%. Taiwan closed up 0.7%. Thailand closed down 0.5%.

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Markets This Morning:

European markets are bouncing back some from yesterday’s declines. The London FTSE is up 0.6%. The German DAX is up 0.6%. France’s CAC is up 0.4%. Spain is down 0.1%.

Oil is up $.90 a barrel at $86.56.

Gold is up $4 an ounce at $1,689.

This Morning in the U.S. Market:

This week is a very light week for potential market-moving economic reports, the ISM non- Mfg Index, Unemployment Claims, the U.S. Trade Deficit, Consumer Confidence, and little else. To see the full list click here, and look at the left side of the page it takes you to.

Yesterday’s report was the ISM non-mfg Index, which fell from 55.1 in September to 54.2 in October.

There are no reports due out today.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 50 points or so down in the early going this morning.

To read my weekend newspaper column click here: Investors Are Not Dumb!

Subscribers to Street Smart Report: There will be an in-depth U.S. Markets update tomorrow in your secure area of the Street Smart Report website.

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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