Indeed, if President Obama moves toward the 1930s model that focuses on the “right to healthcare, the right to own a home, etc.,” he replaces the “rights” of the individual (that founded this country) with the government’s “granting” of said “rights,” leaving our country in trouble (in my opinion).

If, however, he moves to the center, providing a stimulus package not designed to give checks to everybody -- which historically has provided only a short-term boost to the economy -- but rather to inject funds into infrastructure projects like bridges, roads, etc., the multiplier effect for the economy would be significant. Combine this with a thoughtfully conceived plan to stabilize housing prices, and the economic impact could also be significant.

More importantly, as the astute GaveKal organization opines:

“Probably the most important economic transformation which is about to occur is the transformation in personal leadership. Suppose you believe, as I do, that the financial meltdown triggered by the bankruptcy of Lehman Brothers was not a divinely ordained retribution for decades of greed and profligacy, but simply a bizarre accident, caused by the incompetence of the Bush Administration, particularly of Mr. Paulson.

"In that case, the arrival of a credible new economic team in Washington, led by respected figures such as Messrs Volcker, Summers and Geithner, could transform psychology in global financial markets. With house prices stabilizing and an inspiring new leader replacing the doltish President Bush, American consumer and business confidence could enjoy a similar resurgence.”

The call for this week: I’m hopeful that President-Elect Barack Obama will move to the center and take the aforementioned path. If so, the October 10th “lows” should hold. Moreover, my firm’s studies of past elections show that the first “move” by the equity markets following Presidential elections have typically been a wrong-way move. We’re hopeful that’s the case this time.

It’s also interesting that many of the indices have traced out in the charts what could be a reverse head-and-shoulders bottom.

However, the path isn’t certain, which is why my firm has recommended downside “hedges” on most trading, as well as investment, positions. As recommended last week, those trading positions include: ProShares Ultra S&P 500 (SSO); ProShares Ultra Financial (UYG); ProShares Ultra Real Estate (URE); and ProShares Ultra Basic Materials (UYM), the first 3 of which were recommended with a hedge. As for many of the convertible preferreds recommended for investment accounts, given the rally in some of these shares, the idea of hedging partial positions hereto makes some sense.