One way to tell which way the stock market is heading may be just to watch how the presidential polling goes.
Should Donald Trump shake off his recent slump and pull ahead in the race, the market will fall, according to one analysis of recent trends. Conversely, then, should Hillary Clinton continue to lead, that would push the market higher if the findings hold true.
Macroeconomic Advisers set out to study the correlation between stock prices and which candidate was leading in the polls. It used as its benchmark Nate Silver's FiveThirtyEight tracking, which runs election simulations based on polls and economic conditions.
The firm then translated those terms into the trend of the equity risk premium, or the extra return on stocks that investors demand over a low-risk investment like bonds.
As of Thursday afternoon, the FiveThirtyEight "polls-plus" measure of who would win today gives Clinton a 74.8 percent chance of victory to Trump's 25.2 percent, the biggest gap since Aug. 25. However, the Macroeconomic Advisers measure was taken from the Sept. 30 close, which showed Clinton with a 64 percent chance.
The nuts and bolts breakdown for technical analysts is that if Clinton holds her lead to Election Day, the equity risk premium will fall from 3.55 percent to 3.45 percent, equating to a 4 percent rally. If Trump's fortunes turn around, the premium would rise to 3.73 percent, correlating with a 7 percent decline. (A higher risk premium indicates anticipation of more market volatility.)