REPUBLICAN RALLY:

Although historically the stock market has done better under Democratic presidents, investors seem to prefer a Republican in the Casa Blanca, as we have seen in the current rally surrounding the New York Convention. Strong sentiment indicators, like the AAII survey becoming inverted with Bears outnumbering Bulls recently, have finally normalized, as have Michael Burke's II numbers. The VIX hit a multi-year low of 13.9, indicating complacency or August boredom. Stockchart's Bullish percent, or stocks on a buy signal, finally retraced its 6% (3-box reversal) after bottoming in the high 40s.
Unfortunately, this rally might be short-lived as we zoom into the year's worst month - September! One very good indicator of mine - the Nasdaq vs. NYSE Volume ratio (speculation) hit a high of 136 which almost always spells disaster, whereas a low, especially under 100, invariably sees rallies ensue. Couple that with a record high cumulative Advance/Decline total and running headlong into the Intermediate declining tops line from February's top, and we could at least have a corrective hiatus any day.

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REPUBLICAN RALLY: