Well, this weekend was quite the busy one for information and the election. We finally saw what we felt would happen, which was a Biden win. I know it's not over yet, but the election cycle is now behind many of us and we can now move on for the love of everything sacred!
Will it be Trump or Biden? Will we get a vaccine by December or January or March? Will we see the markets sell off or continue to rally? Will we see accounts set new highs or fall to new lows? Will we see the housing market continue to be crazy or cool off? Will we see a recession or recovery? Will we see a good consumer or poor consumer show up for Christmas?
In our opinion, Monday's sell off was based on the final realization that a stimulus package would not come through prior to the election and seeing the beginning of the 2nd wave of COVID cases igniting around the world. Will the 2nd wave be worse than the first?
At present, our decision to delay our rebalance due to changing sentiment and rising concerns over who will become elected and what will ensue as a result has proved to be in line with the declining sentiment in the markets. With the VIX well above 20, the anticipated amount of volatility increase is not disappointing.
We spent September 3rd to the 23rd declining on the S&P 500 index. We met the 50-day moving average and ended up piercing it before trying to reverse back upward these past 3 trading days. Over that period of time, we saw a 10.53% decline resulting in a correction (See 1st chart below).