OBAM Trading Alert – Presidential Approval Index at New Low
posted at 1:27 pm on May 2, 2009 by CK MacLeod
Rasmussen’s daily tracking poll of likely voters shows the OBAM COMPOSITE at new all-time lows. Though we view the downtrend – lower highs and lower lows – as clear on the chart, and see no reason to cover our long-term short position on OBAM, we’re not yet convinced that THIS is the breakdown aggressive traders have been waiting for.
As most of you know, the Presidential Approval Index (PAI) is composed of two elements – the “Strongly Disapprove Percentage” (aka “the Right”) and the “Strongly Approve Percentage” (aka “The Wrong”), with the former subtracted from the latter. Though the two numbers are the closest to equal (and therefore obviously to flipping) that they’ve been in the short history of OBAM as a presidential stock, neither is at a new all-time high or low.
Today’s +1 rating may therefore be attributable to churning within the survey’s margin of error rather than to a significant price move. Indeed, OBAM’s PAI could hit 0 without either element entering new territory:
Furthermore, as long as the people in the middle (aka “Wimps”) split 3-2 or better in favor of “Somewhat Approve”…
…OBAM’s top-line approval numbers of 54% to 45% may remain relatively steady near OBAM’s IPO levels of November 6, 2008, which, though far below OBAM’s all-time highs (69% to 28% during early January), have hardly budged since the second week of April, and which, since they also approximate the election results, deserve to be seen as a “critical support band.” Indeed, the sole significant difference between today’s readings and those of the newly minted President-elect November 6 is a migration of ca. 20% from Wrong to Wimp.
Therefore, consider this alert mainly a warning. The downtrend remains intact, but flattening: We’re still not ready to define these levels as a base, a range, or a ledge. We’d like to see one or more breakouts/breakdowns in the OBAM elements, or a shift in the Wimp Ratios, before risking greater exposure.
Blowback
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CK:
I understand the analysis and I don’t begrudge you doing it because EVERYONE seems to believe in “polls uber alles” …
I’m just sick of them.
The focus on polls is mindless. “Good numbers” won’t rescue us from the effect of bad policy, or vice versa … it’s like all the “appeals to authority” we get in the AGW debate (“a consensus of scientists I choose to listen to – - – the others are hacks – - – say ‘X’”).
Obama’s getting the benefit of the doubt right now. I’d be shocked if he didn’t – he hasn’t even been in office 4 months.
Now, I believe he’s engaging in multiple levels of foolishness and I hope America remains lucky.
If she does, people will think Obama has something to do with it – I could live with that.
BD57 on May 2, 2009 at 4:03 PM
I predict the national unemployment rate, either reported by the media or not, it won’t matter, will define future trends down.
I met a twit today who rolled her eyes when the wife asked for a pair of Sarah Palin style glasses. I stepped in and laid into her. She was a shriveled mess when I finished. She hadn’t a clue about anything, including how her very job as a clerk in the store was tied into all this debt being run up by Obama. Go ahead, tax the boss to the break point, and see who gets fired first, you or the boss.
tarpon on May 2, 2009 at 6:03 PM
Love this!
Buy Danish on May 2, 2009 at 6:48 PM
Don’t forget to add in the dreaded inflation we’re facing. You know it’s coming with the huge deficit the Precedent is imposing. And it won’t matter if the media reports on it or not. One trip to the grocery store for the entire American public, and that cat will be out of the bag regardless of what type of propaganda the media tries to feed us.
Knucklehead on May 3, 2009 at 11:25 AM
Oddly, Gallup is going int he opposite direction with a now a whopping 68% approval vs a 26% disapproval. It’s bizarre to see the differences!
SouthernGent on May 3, 2009 at 8:31 PM
Adults vs Likely Voters, Gallup’s methodology vs Rasmussen’s. We frequently saw similar divergences during the election campaign.
The Wimps will generally tend to reflect the larger wimpitude of Adults, a group which includes, of course, people who can name all of the American Idol contestants, but would have difficulty locating Europe on a map, and are responsible enough never to get near a voting booth. It would indicate a truly dangerous degree if cynicism if such know-nothings had already given up on a widely lauded new president a mere three months into his term.
I tend to think that the PAI is a leading rather than a trailing indicator, since the most strongly committed likely voters on both sides would tend to be following and reacting to the news much more closely than anyone else. For everyone else, nothing has happened yet, really, except that a bunch of incomprehensible numbers have been tossed around by those rich guys in DC… If and when the masses move, they can have a powerful effect, but otherwise they just sort of sit there absorbing things like any good mass.
If we move to an inflationary and/or high unemployment/no-growth economy as per Knucklehead and Tarpon… or if push comes to some other shove… then the mood may sour and Obama may take the hit – though I wouldn’t be surprised to see him poll higher than his policies, and even than his fortunes, permanently.
CK MacLeod on May 3, 2009 at 8:49 PM
Plus you have to think that what generally moves someone over from Wimp to Right or Wrong would tend to be a strong reaction to a new or crystalizing event, rather than a Wimpy general impression or feeling of good will.
CK MacLeod on May 3, 2009 at 9:03 PM