THE BIG IDEA
You may or may not have loved the outcome of last week’s U.S. elections.
Let’s start this week with an important piece of advice: politics and your portfolio do not mix well together.
What you think will happen as the result of an election does not always translate into profits for your portfolio. When Ronald Reagan was first elected president, defense-related stocks initially jumped higher, only to fade and start dropping within weeks.
More recently, Joe Biden winning the 2020 election was supposed to lead to a boom for “clean energy” and cannabis-related companies. They ended up being terrible long term investments.
And that brings us to last week’s Trump Tsunami.
The 4.36% beat down the stock market took on Thursday has (mostly) been blamed on expectations that a new Democratic congress will cool down the AI / data center boom. Somehow, the market was ok with it on Wednesday but changed its collective mind on Thursday.
It is true that people nearly everywhere voted to restrict data center construction. Nobody wants a data center for their next door neighbor.
Blaming Thursday’s plunge on the fallout for AI-related companies doesn’t hold water. Look at this chart for the ProShares S&P 500 Ex-Technology ETF (SPXT). It owns everything in the S&P 500 except tech stocks.
Even non-tech stocks got roughed up on Thursday. They went down by 2.68% for the day. All the way down to where they were… a week ago. We’ll come back to this in a few sentences.
There are also rumors, unconfirmed as far as we know, that a large hedge fund with leveraged investments in AI and/or data centers was facing margin calls from its lenders. Was the ghost of Leopold still scaring some Halloween trick-or-treaters?
So, what should we do now? Panic?
The drop in non-tech stocks on Thursday was really just reversing the previous day’s 2.27% gain. Other than that, there is nothing on the chart worth getting uptight about.
And if it turns out that the market did have another Leopold moment, that would actually be bullish for the near future. Here’s how that played out last summer.
Now if we delve into some more nerdy market data, we see more evidence of a sudden but transient anxiety attack.
In the options market, the equity put-call ratio was at its second-highest level of the year and something you usually see at or near a bottom point in the market.
Meanwhile, the spot VIX index was higher than all of its futures contracts. Long story short, it means the market saw more risk/uncertainty in the present than in the future.
Putting it all together, we think that the market probably… probably … was just having a momentary freak-out over things both real and imagined. Don’t let it scare you into selling.
SEEN ON THE INTERNETS
Past performance does not guarantee future results. You have heard it eleventy million times.
It would be easy to dismiss the chart copied below, posted by Matt Weller, CFA, CMT.
But there it is. Nineteen of the last 19 midterm elections have led to a gain for the S&P 500 in the ensuing six months.
There is no reason why the market must go up between now and May 2027, but if you decide to bet on a decline you will have history working against you.
One thing that Weller did not address was the fact that the results for this century have been more lackluster. The 7.65% average (and median) for those six midterms is pretty ok for a six-month period, but it is far below the results for 1950-1998.
NUMBERS ONLY
23 | 23 stocks in the NASDAQ 100 fell by double digits on Thursday. Sandisk (SNDK) led the way down with a 22.26% plunge. |
$7.5 billion | Amongst all the election talk and wild swings in the stock market, Apple (AAPL) issued $7.5 billion of corporate bonds. The offering generated $31 billion in orders. |
- 32.94% | In the three days since the election, shares of Trump Media & Technology Group (DJT) are down by 32.94%. |
SWINGEX INDEX
As of market close on: 6 November 2026
Swingy says: The index doesn't care what color anyone's nametag is. The odds are in your favor now.
Learn more about how the Swingex Index works here.
WATCHER
Trade ideas highlighted here each week have a timeframe of 3 days to 3 weeks in mind. They are not recommendations to buy or sell. Swing traders should follow up with their own research.
VSXY (Victoria’s Secret): Last week’s Watcher stock was one of the most boring stocks you will find. (if you did not receive last week’s newsletter, you can still read it here)
This week, we are going sexy. Shares of Victoria’s Secret have been acting well lately. That’s especially so of the three post-election trading days.
There was no company-specific news to push up the stock on Wednesday. We don’t have a theory why it should have sprung up as it did after the election. Feel free to make up your own story about it.
What we do know is the shares are standing strong while so many others are going down. And it started two weeks ago when VSXY broke out of a base around $92.
We have missed part of the move, but that’s ok. Look for the stock to continue walking up along its upper Bollinger band.