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We Have Confirmation: Big Rally Just Started!

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November 03, 2010 – Comments (6) | RELATED TICKERS: SPY , QQQ , DIA

On September 27th, I predicted a major rally might be starting. The reason I made this prediction was an alignment of the planets:

1) We are about to move into the third year of the "Presidential Cycle"
2) We have a Democrat as President
3) Republicans are about to win Congress

Yesterday's election confirms we now have the best possible divide in Government: a Democrat as President, Republicans in charge of Congress. By "best possible" I mean for the stock market, of course. That is a historical fact. Whether this is good for the nation is something entirely different, and a matter of opinion.

I put my money where my mouth is: I am almost fully invested in the stock market. I have money for one more position. Any ideas for a company or sector that is poised to take significant advantage of today's new reality?

6 Comments – Post Your Own

#1) On November 03, 2010 at 10:40 AM, Griffin416 (99.97) wrote:

Big banks and oil. Perhaps some insurers or health care. Republicans are for less regulation (which washington has been doing to the banks repeadely and drill baby drill. Bernake will make the price of oil rise and the pubs will try to make more drilling possible. Even if they do not succeed, the thought behind this will push the stocks higher for a while.

You beat me to the blog of reminding people that we have the best possible political combination for stocks. Thanks.

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#2) On November 03, 2010 at 1:21 PM, lemoneater (56.87) wrote:

You were right:)

Recently I started a small position in BSI (Blue Square Israel.) I will admit that I couldn't believe the high dividend around 30%. Whether it is sustainable for long term is another matter, but talk about a stock with personality and volatility! At the worst I could harvest it for a tax loss, but I think this has a bright future with room for growth. I like this for the same reason I like Tesco TSCDY.PK. Both are foreign grocery chains that are so much more than just groceries. Tesco sells pet insurance, and does banking, while Blue Square has oil investments.

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#3) On November 04, 2010 at 3:44 AM, gman444 (28.29) wrote:

I'm one who thinks the Fed's actions are more important that the election results, at least re: the market.  Long commodities, short Treasuries. 

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#4) On November 04, 2010 at 11:53 AM, leohaas (30.09) wrote:

Thanks for the responses.

I am already long commodities-related stocks (oil, gold, miners, and so on) with about the maximum exposure that I am comfortable with, so I will not put more money there.

Healthcare is too much up in the air now. Does anyone understand what the new law will accomplish? Plenty of speculation abound (on both sides), but I am not sure. The newly elected Republicans want repeal, but will they succeed? You'd have to make a few assumptions here. No doubt if you make the correct ones, you will be rewarded accordingly. But what if you are wrong?

I do not have a margin account, so I cannot go short. I'd like to keep it that way. If an ETF for shorting treasuries exists, I may consider that.

I have exposure to big banks and insurers, and I will not add more. I have none to foreign grocery chains. I will look into that suggestion.

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#5) On November 04, 2010 at 5:00 PM, gman444 (28.29) wrote:

TBT is one way to go without buying on margin.

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#6) On November 08, 2010 at 1:34 PM, leohaas (30.09) wrote:

Thanks for TBT. But no, this one is ultrashort, so a no-go for me. Ultrashorts only work for short term investments if you get the direction correct.

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