Right now the markets are slowly heading into the final turn of the year, but spinning into the final turn is still possible. If in the coming days it looks slightly more likely the Democrats will win both the House and Senate as Hillary wins the White House, then look for a sharp sell off into the end of the year. Most major investment banks are looking for a bear market to begin but to date equities have remained stubbornly just off their highs. Big overplayed stocks such as Google and undervalued stocks like AAPL represent a market divided. Calls for a recession beginning next year are being pushed.
What still remains in question is how will the years of accommodation play out. Bears believe the clock has run out on fixes and unprecedented stimulation has brought only temped growth. There are many examples in the economy of odd weakness in real estate after such a long period of low rates and there are on the other hand signs of broad growth in jobs as represented by the current employment numbers.
The pros seem to be a bit short the markets and the general institutional players seem to be cautiously nervous. Look for volatility to pick up either way as we end the year.
