Stocks are bracing for Election 2024 results as voters decide between former President Donald Trump and Vice President Kamala Harris. The two candidates are in a tight race. It's expected that a handful of states will determine who eventually sits in the Oval Office. Control of Congress is also up for grabs.
Successful hedge fund manager Jim Roppel expects "significant moves" in the market as results roll in. But the Roppel Report founder says the upcoming Fed meeting and tech earnings will have more impact on investors.
Election 2024: Changing Odds A 'Curveball' For Markets
Roppel says changing election odds have the markets recalibrating. That is causing volatility in certain sectors.
"The market had priced in a Trump victory," Roppel says. But those market forecasts have seen Trump's victory odds fade in the last two weeks of Election 2024. That shift, Roppel says, was a curveball for the markets and has contributed to price swings in cryptocurrency and China stocks.
"The markets adjusted to no opinion," Roppel said. "So before I would have said when it was largely expected Trump to win we would have nothing postelection. Now I think those stocks are going to have to adjust to whoever does win."
Hedging Against Election Volatility
Roppel says he has adjusted his portfolio due to the shift in market expectations. "I am heavily hedged in index futures right now against all my long stock," he stated. "But I think we are approaching a period of max fear."
The CBOE Volatility Index, known as the VIX, measures the expected volatility of the stock market. That gauge has climbed five points over the last week according to MarketSurge and is hovering around the 22 level as Election 2024 draws to a close.
"It's elevated significantly," Roppel said of the VIX chart. "I think postelection we're going to rip because the market doesn't know it's got a relief valve."
Focus On Fed
Markets will also have to contend with possible action on interest rates on top of election results. The Federal Reserve will hold its November meeting on Wednesday and Thursday of this week. The two-day meeting is expected to end at 2 p.m. ET on Nov. 7, with a press conference featuring Fed Chairman Jerome Powell at 2:30 p.m. ET.
Investors expect policymakers to cut interest rates by a quarter of a percentage point. It would be the second interest rate cut of 2024. The Federal Reserve ordered up a half-point rate cut on Sept. 18. That was seen as the first big step toward cutting its key rate a full percentage point by year's end.
The eventual winner of Election 2024 could also have Fed implications. As IBD Weekly's latest cover story noted:
"Wall Street is divided over whether the Fed needs to significantly cut interest rates. The 2024 election results will intensify that debate. Investors must weigh the risk that tax cuts, higher federal outlays and — if Trump wins — inflationary tariffs could bring a premature end to the Fed's rate-cutting cycle."
Roppel feels optimistic about potential Fed action. "I just don't believe we're going to have more rate cuts next year and the economy is too strong," Roppel said. "They're not going to let the market go down unless it gets out of their control."
Bullish On Tech Despite Mixed Earnings
It's not just potential Fed action that has Roppel feeling bullish. He says the resilience of megacap tech stocks known as the Magnificent Seven in the wake of mixed earnings results is an underlying signal of strength in the current market.
"The Mag Seven [stock group] has been really resilient," Roppel said. He noted that the technical action for Nvidia looked particularly positive. On Nov. 1, S&P Dow Jones Indices announced that Nvidia will replace rival chipmaker Intel in the Dow Jones Industrial Average before the open on Nov. 8.
"Earnings season proved one thing to me: All roads capex-wise lead to Nvidia," Roppel said. "They are the arms dealer in this existential race to dominate."
Nvidia stock fell below a buy point last week, but reclaimed a key level on Nov. 1.
Roppel says e-commerce giant Amazon should also be on investors' radar.
Amazon stock is hovering just below record highs coming off a strong third quarter report. Shares have formed a long consolidation pattern and are hovering just below a record high reached in early July.
"If you could somehow get Nvidia to join the party, this is really, I think, the best barometer for the economy," Roppel stated. Nvidia is scheduled to report Q3 earnings on Nov. 20 after the market close.
Bitcoin Looking 'Beautiful' Ahead Of Election 2024
"One of the most beautiful charts I've ever seen in my life is bitcoin right now," Roppel said. "If you look at a long-term chart, it is spectacular."
Roppel explained that bitcoin prices tend to make new highs after sitting in long bases. The Fidelity Wise Origin Bitcoin ETF, Roppel's preferred bitcoin index, has been in consolidation since March with an official entry of 64.42, according to MarketSurge analysis.
The hedge fund manager says the crypto market is somewhat insulated from Election 2024 results because the digital currency is decentralized. "It doesn't matter who wins," Roppel said. "I've made killings under Republicans and Democrats. It's so hyped up and the fear so high that it makes me want to think that we're going to have a big relief rally."
Bitcoin jumped above $69,900 Tuesday, reversing toward a late October high above $73,500 — nearly touching its March 14 record of $73,798. The world's largest cryptocurrency has rallied nearly 64% so far this year.
Ethereum traded over $2,400 on Tuesday, still below its Oct. 20 peak near $2,750. Ethereum is up about 6.8% in 2024 after reaching a 52-week high of $4,090 in March.
Despite a slew of major news events, Roppel says investors should remain calm and committed to their buy and sell rules.
"The market's going to move forward," Roppel said. "I am 100% confident we are going to make a killing in the next four to five or 10 to 15 years off of this AI revolution."
