November 2004
Does the quarter-point increase in interest rates in the last Federal Open Market Committee (FOMC) meeting prior to the US Presidential elections in November mean that we can expect the economy to improve? Well, it appears as if Alan Greenspan and the crew at the Federal Reserve believe so. This sentiment, however, isn't for many of the analysts, who seem to think that economic growth will probably be slower than expected. As usual, we won't find out until it actually happens. So let's put aside the interest-rate hikes and focus on the more significant question facing many of us, that of the US Presidential elections. Whether the incumbent wins or not, whether the Republican or the Democrat comes out the victor, how will the financial markets fare after the election?
To answer that question, we were fortunate to speak with Jeffrey A. Hirsch, son of Yale Hirsch, of the Hirsch Organization. Like his father, Jeffrey is a market historian who has seen repetitive patterns forming in the markets. What is interesting is his analysis of stock market behavior during the Presidential election years, and from what he says, we may be able to predict the outcome of the elections just by observing the financial markets. What is even more interesting are his insights on market performance during various time frames throughout the year. This comes in handy when it comes to getting the big picture, which should be the first step of any trading plan. It's only later that you focus on shorter time frames to identify your entry and exit signals, as you'll find out from Kathy Lien's and Patrick Dyess' article, "Trading Currencies Using Multiple Time Frames," starting on page 60. Confirming signals in various time frames increases the possibility of a successful trade, but often we get so caught up in these short-term time frames that we forget the big picture. So it helps to pay attention to the macro factors such as the Presidential elections and how they affect the markets.
While we are on the topic of elections,
I can't help but be reminded of the voting we have every year at STOCKS
& COMMODITIES magazine -- that is, our Readers' Choice Awards. Please
stop by our website at Traders.com and vote for the products and services
you think deserve recognition. With the plethora of resources available,
it's always a great help to fellow readers to know which ones you like.
Jayanthi Gopalakrishnan,
Editor
Originally published in the November 2004 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2004, Technical Analysis, Inc.
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