Election day is tomorrow and it will get very interesting around here really soon. How the market will react is a complete unknown, although my guess is it will fall if Romney wins simply because he will let Bernanke go, and he will usher in the age of no more free money. The market will almost certainly hate that to happen. Romney will represent an era of taking the medicine. Markets prefer a free ride forever, regardless of the consequences that come from such behavior. If Obama wins the market will probably celebrate some initially simply because the free ride will stay around. In time the truth will catch up, but that can be many years away. There's still absolutely no sign of a bear market anywhere to be found, even though it may feel like it.

So tomorrow the market gets the jitters ahead of the election, and then we get the big response on Wednesday pre-market. At least things aren't boring for market participants. Now, longer-term, the market will probably not care very much about who wins as even Romney will likely, at some point, cave in to the pressure of a falling economy. His plans will certainly create that environment, even if it's the right thing to do. The political pressure simply too great, but we don't care about the long-term quite yet. We care about the next, very interesting, few days, and they suggest some wild action is about to take place. Enjoy the ride.

The longer-term affects of the stock market, meaning at least one year out, doesn't look great no matter who wins. If Romney wins, and he can hold onto his belief of taking the pain to wipe out the debt, the market will get crushed. No free dollars any more, and with Bernanke fired, there won't be much hope from the next Fed Governor who will be appointed by Mr. Romney. If he can hold to a tough love stance and deal with incredible political pressure to give free aid, and thus, more debt, we will all be better off for it in time. Chances are he won't be able to, but initially, his stance will create a lot of fear.

The market could really get smoked. If Obama remains his, free money at all cost stance will ultimately come home to roost. The debt will overwhelm. Europe will likely fall apart and so will our economy. That could take years, thus, our market may continue to do well for some time to come, but in time, the truth will have to win out. It doesn't look great no matter who gets in, but for very different reasons, and thus, the timing will be very different as well. If Obama wins, the bull could last some time longer.

The market sold early but fought back before approaching 2954 or the 200-day exponential moving average on the Nasdaq. The S&P 500 and Dow are still well above that key level of support. The reason the Nasdaq was saved today was simply because Apple Inc. (AAPL), which lost its 200-day exponential moving average on Friday, came back and tested it today. It's right on it here. It has sold off 125 dollars and may need time to unwind back up a bit before it tries lower again. AAPL saved the Nasdaq today for sure. The market still has a decent chance of losing those 200's, even on the Dow and S&P 500, especially if Romney wins the election tomorrow night.

If he doesn't win, you still could see it take place from the natural move a market correction makes in testing, or even breaching, those 200's. It doesn't have to, but you must always prepare as if it could. While the action has tested the patience of the bulls, there is nothing out there suggesting the beginning of a new bear market at this moment in time. There's no heavy distribution. The market is still rewarding good earnings reports. It's still rewarding the ridiculous P/E stocks, such as Amazon (AMZN) for now. No distribution. No selling off good news. Two key components you look for when a market is changing its longer-term stripes. For now, the best thing you can do is show patience. No reason not to have some small exposure. However, no reason to be loaded up either.

We'll get a lot more insight in just one more day.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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