The U.S. midterm elections are being held today, and I’m not watching to see who wins—I’m watching to see when the results come in. For trading, the winner is only the first layer; the speed of the count and how quickly the outcome becomes certain are the second. Historically, the S&P 500 rose more than 2% the day after the 2018 midterms, and risk appetite quickly recovered once the results became clear. After the 2022 midterms, uncertainty over which party would control the Senate weighed on the market during the count, followed by choppy trading until inflation data and expectations for the Fed’s decision took over pricing again. If Republicans win big, expectations for tax cuts and deregulation will heat up, and risk assets will probably surge at first. If Democrats win big, expectations for tax hikes and tighter regulation will weigh on markets in the short term. A divided Congress is actually the easiest outcome to handle: major policy moves are unlikely. What markets fear most has never been bad news—it’s no result at all. Before every Fed decision, markets price in expectations in advance. The probabilities on CME FedWatch can swing sharply within just a few days, and elections are no different. Whatever could be priced in before Election Day already has been; the real volatility comes during the days of counting. Mail-in ballot processing rules vary across key states, so results can take hours or even days. The VIX and the Fear & Greed Index are most honest at times like these: the index ranges from 0 to 100, and sentiment can shift from extreme fear to greed in just a few days. On one side, people fear missing out; on the other, they fear catching a falling knife. A certain coin—is this call right? We’ll check back next week.