Elections have Consequences: a Continuing Series

One of a series:

Yesterday the markets closed at four-month low, matching levels not seen since June. The Dow Jones Average dropped 185 points (1.5%), to 12,571, the S&P 500 shed 19 points (1.4%,) ending at 1355 and the Nasdaq Composite slumped 37.1 points (1.3%), to 2847.

The media has attempted to blame this on Greek financial woes, the fiscal cliff, and the fact that somebody saw a black cat crossing Wall Street against the light. But in truth the drop has been steady for over a week, as if something particularly disheartening occurred the Tuesday before last. As the election was staggering to its sorry climax, Dow Jones reached 13,112.44, the S&P 500 closed at 1,417.26, and the Nasdaq tech index 2,999.66. Each has fallen steadily since then (despite a few trivial gains such as occurred this past Monday), the Dow Jones alone dropping nearly 540 points. Tellingly, the CBOE Volatility Index (called "the Vix", for short), the market's so-called "fear gauge", jumped nearly five points to 18.42 as the election returns started coming in. Its average since then has been 17.83. Last night it rose to 17.91.

Worse still, both the Dow and S&P have for four days closed under their long-term average, which suggests serious trouble in the wings. (This average is figured over a 200-day period.) Closing under the average for a period of a week is considered to be a sure sign of a coming bear market.

Did somebody say, let's tax them millionaires? If that's the plan, they'd better move fast.

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

-- H.L. Mencken