US market may see near-term volatility: Ryan Detrick

Inclement weather caused by a massive storm, Sandy forced a two day closure of the US markets. On Wednesday the market opened and Ryan Detrick, Chief Strategist at Schaeffer's Investment said there are a lot of uncertainties in the market which is pulling it lower. Once the elections are over, there can be some clarity about the market direction, he feels. Till then, there could be near term volatility and downtrend, added Detrick.

Here is the edited transcript of the interview on CNBC-TV18. Q: It has been a horrid couple of days; tell me what is going on in the market?
A: It has been a very interesting few days here but, all in all we opened the market okay and we have some optimism now. Once again though the Dow is nearing lows of the day as we speak and it continues to be a concern. Obviously, earnings are mixed across the board but the bottomline is these uncertainties continue to dominate, whether it is the election, the economy, earnings, the European issues or the poor yields.
All these rallies will be sold and until we get through the election next week which is a big uncertainty, I wouldn't be shocked at all as volatility and downtrend in the near term probably will continue here. Q: Given that volumes are light, how seriously would you take today’s declines?
A: The volume isn’t too huge but just the fact that we are up significantly or up pretty good, at least over 100 point Dow swings from top to the bottom is always concerning. We are kind of oversold in the near term and still we cannot seem to find much of a rally. Last week we dropped 1.8 percent on the S&P and now on the first day of this week we are down again.
Volumes are light but that’s on a price action and it is what matters. In the near-term, S&P is in its 50 day moving average strictly on 1400. We think 1400 is a pretty big level if you draw a simple trend line from the lows last October to the lows last June and continuing that trendline it goes right to about 1,400. You can argue that rally has been for the past year. We have got 1400 and it could potentially be a sign that the trend is changing and maybe the bears are going to come out and continue to push things lower. So it’s a pretty big area we think. Q: The fact that you think the trend maybe changing, do you put that down to short-term volatility because of the elections or bigger term fundamental issues that seem to have come up in the earnings?
A: Yes, if you look, even this market at least the US market started to go down. Obviously, people have been saying it is because of earnings and earnings havn’t been that great. But at the same time most of the people think Obama is going to win this election and all of a sudden Romney comes out with a pretty good debate.
The market hates indecision without question and that has kind of led us. But, I will say on the flip side, we look at the polls very closely and there are levels about bears consistent in a lot of these polls in US. In other words, yes price action is weak and people are starting to get pretty scared and this market is going to drop in the next few days, maybe into the elections. It is a real fear that again has helped bottom out the market and we are starting to see that. That is the positive but we still need the price action to start to bounce obviously before we are going to have any rally. But, Europe is out there and that is a good sign. Q: Give me your election scenarios, if we do get President Obama come back to White House next week, what impact will he have on the markets and equally what happens if Mitt Romney comes to power?
A: We have done studies and honestly it does not seem like too big a difference to those in power. But, I will say that market knows what it is going to get when it comes with Barack Obama. I do think we might rally a little bit more. If Romney wins, there is that little bit of uncertainty but, that is just very near-term. Longer-term I guess I do not know who is in power and what makes too big a difference for the stock markets.