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Underestimated Risks in the U.S. Midterm Elections?

The market is seriously underestimating the risk that the results of the U.S. midterm elections could be challenged, triggering political and legal disputes. At the same time, hedging costs on Wall Street have fallen to their lowest level of the year, and the implied volatility of S&P 500 put options for November has dropped below 15%, creating a low-cost window to buy protection early.

The probability that the election results could be disputed, or even spark political turmoil, is being severely underestimated by the market, and current pricing in the options market does not fully reflect this tail risk.

As the market calmed in August, the implied volatility of S&P 500 put options has fallen significantly from its July highs. The calmer the market, the cheaper protection becomes; but once election risk is truly priced into assets, volatility could rise rapidly, and the cost of hedging at that point would increase markedly.

The core logic is built on the current polling situation. Polls generally show Trump’s approval rating slipping, Democrats likely to regain control of the House, and Republicans expected to keep their Senate majority.

What the market is truly overlooking is not the election result itself, but the political and legal disputes that could emerge if the result is challenged. If the final outcome is unfavorable to Trump, the market is severely underestimating the likelihood that Trump would react strongly and challenge results in certain districts.

In that scenario, Trump may launch legal challenges to every “contested” district, delaying the certification process and triggering a wave of media coverage around disputes such as “what happens next” and claims that the election was “stolen.”

This political uncertainty could ultimately spill over into financial markets and drive volatility sharply higher. For markets, the most dangerous outcome is not necessarily that one side wins, but that the election result remains unconfirmed for an extended period, creating persistent uncertainty.

$SpaceX (SPCX.US)$ After nearly two months, the company’s market capitalization has once again risen above $2 trillion. Estimated in a report: SpaceX’s weight in the Nasdaq-100 is expected to increase to about 1.51%, which would drive passive net buying of roughly $12.4 billion in stocks by index funds and ETFs tracking the index. However, it’s worth noting that passive buying is mechanism-driven and represents predictable inflows; some “smart money” may have already positioned ahead of time. When the effect actually takes hold, the degree of upward price elasticity depends on the attitude of active capital at that time. The following reviews SpaceX’s current stock price trend and key structure one by one from a technical perspective.

SpaceX is currently maintaining a short-term uptrend, with a strong breakout from the prior consolidation range, and the structure is intact. Of note, the EMA60 has crossed above the EMA20, and short- to mid-term momentum remains biased bullish.

Key Technical Indicator Interpretations
EMA moving averages: EMA5 is $148.07, EMA10 is $144.87, EMA20 is $140.99. The EMA60 breaking above the EMA20 is an upgrade signal for the medium-term structural trend; the moving-average structure is healthy.

RSI: 62.58, sitting in a neutral-to-strong range. Over the past 10 days, the RSI has risen in step with the stock price; no top divergence is evident, and momentum is still present.

MACD: The MACD line (4.01) > the Signal line (2.58). The histogram is positive and continues to expand. The golden cross is maintained. With the indicator located above the zero axis, bullish momentum continues to strengthen, with no divergence observed.

Bollinger Bands: The bands are in an expansion phase. The latest closing price of $153.47 has broken above the upper band, indicating a strong trend. However, be cautious of the risk of a mean reversion back toward the middle band that can be triggered when band width expands and then narrows.

Fibonacci: The current price of $153.47 is above the Fibonacci 61.8% level ($150.98) and below the Fibonacci 50.0% level ($165.23). The next upside target reference is $165.23, and the near-term support is $150.98.

Overall Assessment
Regarding key support, $150.98 corresponds to the Fibonacci 61.8% retracement. The stock has recently broken effectively above this pressure level, and that area has now turned into support. If the level is lost, then $145.14 (the September 8 intraday low with a lower shadow) forms a near-term bottom reference. If the price continues to fall, you can watch the EMA60 ($141.65) and the MA50 ($135.99) as two medium-term strong support levels.

On the resistance side, focus first on the intraday high of $155.00 on September 8. On the medium-term directional front, the Fibonacci 50.0% retracement level at $165.23 is the more distant, key medium-term resistance. If near-term momentum continues, it can be referenced as a medium-term target direction.
$SPCX

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