In recent Wall Street news, with the outcome of the November 2006 mid-term elections giving the Democrats control of Congress, Wall Street has been busy looking for advantages in what becomes a divided Washington DC; Democratic control of Congress and Republican control of the White House will likely mean two years of legislative gridlock. It will also mean a new chapter in the politics of Wall Street. How this change in legislative direction will affect Wall Street news and successful traders remains to be seen, but the fact that Wall Street is not a political spectator is well known.

While it is difficult to determine the full scope of impact with a shift of power, the beginnings were evident. Businesses were making late contributions to Democratic candidates and lining up ousted lobbyists in order to begin courting new representatives. While Wall Street news and politics has little to do with party controls the government, it has much to do with greed and fear. Each party has a different political agenda and each party’s politics affect Wall Street news differently.

For example, Democratic control of committees and sub-committees could create tighter regulation of pharmaceuticals and telecommunications, areas that enjoyed greater freedom under Republican control. Also, Democrats would likely favor the end of tax cuts, the increase of the minimum wage, and regulations to curtain the rapidly growing deficit. All of these issues could have negative impact on both the money management issues for businesses and the political impact on Wall Street. Conversely, the Democratic approach to illegal immigrants has favored a guest worker visa program, which could provide businesses with more low-cost labor.

While the shift in control appears to be war related, it will be difficult for Democrats to make broad sweeping changes in the overall direction of the government. Even though the housing market has stumbled, overall the economy appears to have firm footing. In addition, with a Republican president, it all but guarantees that very little changing will occur within the first two years. This consistency, even if it is forced, is quite pleasant to the political minds on Wall Street. The longer businesses can operate under favorable laws, the longer the stock market will try to mirror the success of the last few years.

As Wall Street news monitors the political landscape, investors need to be vigilant as well. The same way that success on Wall Street can alter politics in Washington, the politics of Washington can alter Wall Street. Traders need to keep an eye on events in the Wall Street news, use solid fundamental and technical analysis and take advantage of a stock investing system to maintain profitability as the new Congress takes shape.

While the Wall Street news and the monthly magazines can give assessment of current events, a stock market trading system such as Japanese Candlesticks provides an accurate assessment of the events shaping the markets. Learning how to read candlestick chart patterns is invaluable for times such as these because a stock trading system such as Japnaese Candlesticks aids the investor in understanding the trends and possible directions of the markets. As today’s Wall Street news mixes politics and Wall Street, the savvy investor will find the opportunities that this change of power brings.

Market Direction: 

When the Dow is positive and the Nasdaq is negative or vice versa, that usually is an indication that the current trend is still in progress. In an uptrending market, witnessing one index up while the other index is down, reveals that no money is coming out of the markets, just shifting from one sector to another.

Good Investing

The Candlestick Forum Staff