The fall season is shaping up to be a wild ride for the stock market, with the upcoming election adding a layer of unpredictability. So, what does this mean for those trading the election this year? Let me break it down for you.
Election Year Volatility: A Historical Perspective
It’s easy to say that election years bring volatility—after all, history supports it. But here’s the kicker: markets often quiet down before the election, only to explode afterward. I did some homework (which I love) and found that since 1950, October has shown an average return of 75% up, while November has averaged a 1.63% increase over the last 74 years. This means good things tend to happen post-election, despite the expected turbulence. If you’re trading the election, the key is to be strategically positioned. If one party seems stronger, consider favoring ETFs or sectors that align with their policies. Alternatively, you can hedge against volatility by buying insurance. Remember, volatility isn’t something to fear—it’s an opportunity.
The Case for Gasoline Futures Amid Stagnant Crude Oil Prices
Crude oil prices have been stuck in a sideways pattern, disappointing traders every time it looks like they might rally. However, gasoline futures are telling a different story. The future contracts for gasoline have been trading between $2 and $3, and right now, they’re bottoming out near $2. This presents a solid risk-reward opportunity, especially with refiners cutting back production for maintenance, which could drive gasoline prices up. Despite the lackluster demand for crude, the potential for gasoline to rise makes it an interesting play for the fall.
Rethinking the AI Trade
Let’s talk about AI—a hot topic that’s not going anywhere. But instead of focusing solely on the big tech players, consider diversifying into sectors like cybersecurity or mid-cap stocks. While it might not sound as exciting as chasing the next AI giant, mid-caps offer a balanced approach, especially with the uncertainty surrounding the election. The IVO midcap ETF is a smart way to play it safe while still gaining exposure to potential growth sectors.
Final Thoughts
As we move closer to the election, it’s crucial to stay informed and adapt your strategies accordingly. Whether you’re looking to capitalize on post-election market trends, explore opportunities in the energy sector, or hedge your bets with mid-cap stocks, the key is to remain flexible and ready to seize the opportunities that volatility brings.
CLICK HERE to watch my segment on Business First AM covering key considerations for those trading the election this fall.
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