What Would Happen To The Stock Market If The Election Is Still Undecided After Tuesday?

After more than a year of rallies, primaries, debates, controversies and scandals, we’re only one day from the Presidential election--meaning investors are closer than ever to that long-awaited clarity on how the election will be felt in the markets. 

Chris Versace, CIO & co-founder of Tematica Research, addressed that clarity on Monday’s edition of PreMarket Prep. Here’s how he expects the market to shake out, based on each possible outcome of Tuesday’s election. 

Scenario One: A Trump Victory

According to Versace, investors banking on a Trump victory should first and foremost avoid healthcare stocks, since his healthcare reform plan remains relatively unknown.

However, Versace stated that Trump has been very consistent on his plan to rebuild the might of the U.S. armed forces. This should benefit stocks such as Lockheed Martin Corporation LMT, Northrop Grumman Corporation NOC and General Dynamics Corporation GD.

Gun stocks such as Smith & Wesson Holding Corp SWHC, Sturm Ruger & Company Inc RGR and even TASER International, Inc. TASR should also see a rise from Trump's vow to further arm police forces across the country.

Scenario Two: Limbo

What if neither presidential candidate secures the necessary 270 electoral votes needed to claim the White House?

Versace suggested that the strength seen in Monday's trading session will carry over into Tuesday. If by Wednesday morning there is no clear answer on who will move into the White House, expect stocks to trade sideways until there is some clarity.

If Clinton ultimately emerges victorious, Versace expects the market to then bounce back up, while he thinks a Trump win will result in continued weakness.

Madame President

Versace didn't directly address what stocks to own if Clinton emerges victorious, but marijuana stocks could be worthy of a closer look.

Analysts at JPMorgan expect the stock market to rally 3 percent under a Clinton victory, with health care, energy, financials and consumer discretionary stocks expected to benefit the most.

Fool-Proof Ideas

Investors who don't want to play the guessing game and want exposure to stocks that will benefit under either a Trump or Clinton presidency should consider Amazon.com, Inc. AMZN as the current upswing in ecommerce is expected to continue. By extension, United Parcel Service, Inc. UPS will also benefit from the steady growth in ecommerce.

Versace also highlighted Dycom Industries, Inc. DY as a winner under a Trump or Clinton administration. As a telecom network powerhouse, Dycom is likely to benefit from both candidates plans to update U.S. infrastructure. After all, no one will be putting down their smartphone any time soon.

Listen to the full discussion with Chris Versace at 35:25 in the clip below.

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8-9 ET here, or catch the podcast here (soundcloud.com/bztv).Listen to the full discussion with Chris Versace at 35:25 in the clip below.

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8-9 ET here, or catch the podcast here.

Photo credit: Joe Shlabotnik, Flickr