Obama Wins Re-Election, Now for the Fiscal Cliff Next

George Brooks |

My recent posts have warned readers to be suspicious of rallies (like the one yesterday). I also alerted readers to be prepared for an excellent buying opportunity, reminding them that November 1 to May 1, marks the “Best Time for Owning Stocks,” a consistently reoccurring pattern.*

I also stated that if Congress gives us a reason to believe it can come together to find a reasonable bipartisan solution to the fiscal cliff – the market is going “NORTH.”

TODAY: Down at the open to DJIA 13,136 (S&P 500: 1419), a bounce, then down to 13,090 (S&P 500: 1414) at the close.

BIGGEST OBSTACLE NOW:

The biggest obstacle to economic growth and stock market appreciation going forward is the fiscal cliff, $607 billion of automatic spending cuts and tax increases. The deadline is assumed to be December 31 (!).

That doesn’t leave much time to act for a Congress that refused to negotiate a balanced approach to the problem last year. Now that President Obama does not have to run for re-election, he can attack the issue aggressively, offer a hard-hitting solution to the problem, and negotiate until an agreement is reached.

The big obstacle that the Tea Party members of Congress will have to address is their pledge to Grover Norquist NOT to raise taxes.
Norquist is the conservative head of Americans for Tax Reform. But Norquist was not elected by the American voter to hold office. The Tea Party must decide who they represent – the American citizen or Mr. Norquist.

The Tea Party Republicans cannot opt for a one-sided solution, or simply say “no.”

Investor’s first read - an edge before the market opens

DJIA: 13,245.68
S&P 500: 1428.39
Nasdaq Comp.: 3011.93
Russell 2000: 825.64
(Wednesday, November 7, 2012 (8:58 a.m.)
If Republicans controlled the House, the Presidency and Senate, it could do anything it wanted – but it doesn’t.
Reportedly, the ideological gap between both parties is even greater now than a day ago. Like it or not, both parties must set ideological differences aside.

No one gets to call all the shots. The electorate sent these people to Washington to do a job. It will not tolerate pre-school bickering. Mid-term elections are two years away for House members.

Solutions to issues have always meant compromise. Failure is not in the best interests of the country (and world), it is dereliction of duty. People get fired from a job or run out of office for less.
With the election behind us, the “press” will pounce on the fiscal cliff. All media ( print, TV, radio, Internet) are competing for market share, and that means they are going to play with your head as the deadline approaches. It will get scary.

That has to adversely impact the stock market and that should set up an excellent buying opportunity, maybe between Christmas and New Year’s Day!

I have noted before and it is important to note again – Congress has “wiggle room” on this issue, though you won’t read much about it. It can delay a decision, pending specific negotiations on tax reform, something that can’t be accomplished in the 7 weeks before year-end.
It’s a shame all these guys and gals have to spend so much time of their tenures running for re-election, but now they have a chance to address issues in a reasonable bipartisan issue. I damn well expect them to do just that!

FACEBOOK (FB - $21.17): No change. FB is stabilizing above $21.00. Break above $21.55 sets stage for rise to $22.45. FB’s ability to move up is complicated by millions of shares coming on the market that could be sold , shares that were in “lock-up” from its IPO. On Monday 234 million shares became eligible for sale, on Nov. 14,777 million shares become eligible and on Dec. 14 another 156 million shares. Yesterday’s volume was 32 million shares.

I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because on May 21, I felt at $34 it was very vulnerable in face of all the misunderstanding and hype. I warned of a drop to $24-26, which it did shortly thereafter. Following a rally back into the 30s, FB dropped into the low 20s where on August 2, I forecast a low of $16.88. On September 4, it hit $17.55, its low since its IPO at $38. I’ll continue technical coverage for a while to accommodate readers, but think my objective here has been accomplished.

George Brooks
*Stock Trader’s Almanac: This is a “must own” publication, loaded with daily, weekly, monthly savvy. It is “the source” for strategies, seasonalities, recurring events, useful stats. Published annually, I have used it every year since 1968. Nothing compares!
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AERI Aerie Pharmaceuticals Inc. 37.70 -0.85 -2.20 214,411

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