Now that the conventions have come and gone, it's looking very likely that President Obama will have another four years in the White House. It takes a lot apparently to unseat a sitting president. After all, we re-elected Bush after barely electing him the first time. The polls are close, but the betting line heavily favors Obama. In case you aren't familiar with the real money trading site, Intrade, it has the odds at 57% in favor or a second term. Volume has accelerated dramatically in the past couple of weeks, adding some credibility to the prediction.
In the chart below, the blue line (and right scale) shows the odds of Obama winning reelection. I overlaid the S&P 500 (in red and scaled to the left), and there is a very strong correlation between the direction of the market and the odds of Obama winning:
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