The Election Is Over…Now What?
by Todd Shriber
Election Day has come and gone, sort of. But it is clear the Senate will remain in Democratic hands while a tidal wave of change has swept the Republicans into control of the House of Representatives.
As of this writing, we are still waiting on results from the Alaska, Colorado and Washington senate races. Colorado has serious re-count potential, and Washington has shown a penchant for close state-wide races.
The result of the Alaska race may not be known for weeks due to Sen. Lisa Murkowski running as a write-in independent. This one looks likely to stay with Republicans, because the Democratic candidate is running a distant third. If Murkowski wins as an independent, she’ll probably put an “R” next to her name because she has represented Alaska as a Republican.
As of this writing, 60 House races still needed to be counted, but various media outlets put the tally at 225 Republicans and and 150 Democrats. That probably gets us to 240 Republicans and 195 Democrats, or somewhere in that neighborhood.
As mentioned Tuesday on TraderDaily, figuring out what the S&P 500 is going to do following a midterm election isn’t that hard. Simply put, the market is probably going to go up, so the question becomes by how much?
Well, that depends on whether or not the market views Tuesday’s outcome as a landslide. Looking at the performance of the S&P 500 following the 17 previous midterms, analyzed in a Seeking Alpha article, there aren’t a whole lot of landslides, but 1974, 1994 and 2006 can be considered fine examples.
That graph shows the S&P 500, while positive, didn’t deliver jaw-dropping performances in 1974 and 2006. Those were Democratic landslides. On the other hand, the index soared in a big way in 1994, obviously a Republican landslide.
More of the same to come? Only time will tell. And in case you’re wondering about 1986, the best year on the chart, the Democrats reclaimed the Senate majority, but just barely. And their House gains (they were already in the majority there) were scant.
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