There are some days that make you wonder if stocks trade in an 'orderly market'. That is, there are some days that make you wonder if the stock market is rigged. Today is one of those days. But it could just be the jet lag talking.
Your editor woke up in Sydney this morning bleary-eyed and suspicious. The S&P 500 was down almost one percent as of 1:30pm in the US. But by the close it had eked out a small gain to close at 1433. If the stock market isn't rigged, what else could explain the death-defying behavior of the indexes lately?
It must be the Romney Rally!
The S&P is up 15% from the June low of 1278. It's now up 14% for the year. That's better than Treasuries, corporate bonds, commodities, and stocks in Asia and Europe, according to Bloomberg. And it also happens to coincide with the rise in the polls by the former Governor of Massachusetts and current Republican candidate for President, Mitt Romney.
National polls show Romney tied or in the lead against incumbent Barack Obama. But the national polls don't mean too much. The election will come down to a few key states like Florida, Ohio, Virginia, Colorado, and Iowa. The race is too close to call in those states.
But the stock market may have spoken already. The last of three Presidential debates is tonight. The subject is foreign policy. This will come as a relief for the President, who in the last two debates had trouble defending his economic record. Perhaps the stock market is telling us that unless he blows it tonight in spectacular fashion, Romney is closing the sale with the American public.
Anyone outside the US is likely to be shocked by a Romney victory. The US media hasn't exactly covered itself in glory during the campaign. Only lately have they begun to suggest that the President might lose. But as with any election, it usually comes down to the economy.
If people are happy and prosperous, they tend to stick with the devil they know. You only go with the devil you don't know if you're already in hell. There's nothing to lose at that point.
But then maybe we're making this harder than it has to be. Yesterday's close on the S&P actually leaves it three points below where the index closed on September 13th, the day Ben Bernanke announced QE3. Remember that amounted to nearly $85 billion in bond buying by the Fed each month for the rest of the year.
Stocks did most of their rallying well ahead of the news. But there was no actual selling on the news. Instead we've had a bit of a trading range dating back to September 7th. The top of that trading range is 1465. We'll see what Murray says about it in his Wednesday column in Money Morning.
for The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.