Last Thursday, we posted the following ‘mystery chart’ on Twitter, and asked whether it was a “buy” or a “sell.” Judging simply by the looks of it, the chart looks pretty attractive. It’s clearly trending higher, and after a brief pullback in the second half of 2019, it has seen a sharp rebound putting last year’s highs back into play.
While it was only last week that we originally tweeted the chart, since then there has been a clear breakout above the summer high (~50). From a technical perspective at least, it looks like our ‘mystery chart’ has experienced a classic breakout.
So what exactly is this mystery chart which appears to be in the early stages of a new leg higher? Drumroll, please! It’s actually the probability of President Trump winning re-election in November according to the website electionbettingodds.com. At the current level of 53.1%, the market’s pricing of President Trump’s re-election has never been higher.
While President Trump’s chances of winning re-election have seen a big boost lately, these gains have also been accompanied by some interesting moves on the Democratic side. Last Friday, a new Des Moines Register poll showed that Senator Bernie Sanders took the lead for the first time in its polling for the February 3rd Iowa caucus. At 20% in the poll now, Sanders hardly has a commanding lead, and three other candidates are polling at 15%+ (Warren, Buttigieg, and Biden). As a result of that poll, though, we saw a sharp drop in Biden’s chances of winning the nomination and further gains for Sanders after what has already been a strong showing in the last several weeks.
Whether the reasoning for Trump’s recent gains is that Sanders is less likely than Biden to win in a general election or that the party will be too divided to generate enough excitement around one candidate in a general election, the betting markets seem to be interpreting the recent surge in Sanders’ standing in the polls as a positive for President Trump’s re-election. That’s a positive for Trump fans in the present, but just like technical analysis, the election betting markets haven’t exactly had a perfect record at predicting the outcome of events. To read Bespoke’s most actionable stock market research, start a two-week free trial to Bespoke Premium. You’ll unlock our most popular reports like our Morning Lineup, Model Portfolios, and Chart of the Day.