Superstorm, Super Election

 

It’s been a rough go of it for the entire country over the past several days, and though the worst of “Superstorm Sandy” is over for most, the cleanup and restoration of the damage is just beginning. I first want to extend all of my wishes to the victims of this devastating tragedy, and wish them Godspeed in their return to normalcy. I also want to congratulate all of those who braved the elements and came to the aid of their fellow citizen. This is the way we do things in America, and though we have our disagreements about who should be our next president, or about what the proper role of government is, or about which way the financial markets are headed, when it comes to taking care of our own we do so in laudable fashion.

 

Now that Sandy’s wrath is mostly over, the return to trading on Wall Street has begun, and now we will have to see how stocks react. Before the storm took center stage, and before it forced the cancellation of two trading days, stocks had sold off after a plethora of downbeat earnings reports sent shivers through Wall Street’s spine. Here we are not talking about some obscure companies falling a bit short of expectations. Rather, we are talking some of the biggest, most loved and most owned bellwethers in the market today.

 

Some of the corporate names that have left investors feeling less than enthusiastic with respect to their fiscal performance during the third quarter are 3M (MMM), Apple (AAPL) Caterpillar (CAT), DuPont (DD), General Electric (GE), Google (GOOG), Intel (INTC), McDonald’s (MCD), Microsoft (MSFT), United Technologies (UTX) and United Parcel Service (UPS).

 

The rash of disappointing numbers, along with restrained outlooks for Q4 and the full year, prompted sellers to take control of the market. Last week, the Dow fell 1.77% while the S&P 500 lost 1.48%. The NASDAQ Composite managed to hold its own, sliding just 0.59% on the week.

 

 

More importantly, the selling now has taken all three major indices below their respective 50-day moving averages. Historically speaking, this is the first step in a potential correction. The next step would be a breaking of support at the respective 200-day moving averages. If stocks fail to maintain their integrity above these levels, then look out below.

 

I expect the next several days to be laced with a lot of cautious trading, as everyone will resume their focus on the presidential election. In fact, by this time next week we will know who the next president is, and that will undoubtedly have a big effect on both the perception and mood of the markets. As always, I want you to be prepared for anything, because as history tells us, things can change when you least expect it.

 

Finally, I have good news to offer you during what has been a challenging week. With just days to go until the U.S. presidential election, your investments and personal wealth depend greatly on who wins. That’s why my colleagues and I have prepared a special investment report for you, absolutely FREE of charge. It’s called “Eagle’s 2012 Election Guide: 4 Winning Picks for the Next President.” You’ll learn of four investment recommendations for a Mitt Romney win and four plays for a second Obama term. But that’s not all we’re offering you. The day after the election, on Wednesday, November 7th, 2012, at 2:00 pm ET, I invite you to sign up to receive the free special report and to join me for a FREE online Post-Election Investing Summit.