Nervous November start: This is why traders are miserable right now

It's the first day of November. Remember the old trader rule: October sucks, and November is good.

That's the mantra, and who could blame them for feeling that way?. November is the #1 month for the Dow in presidential election years, and No. 2 for the S&P 500, according to the Stock Trader's Almanac.

It's also the start of the "Best Six Months" period as well. Since 1950, the S&P is up 7.5 percent in the six-month period from Nov. 1 to April 30, while it is only up 0.4 percent in the six-month period from May 1 to Oct. 31.

So, why are traders so miserable?

Because the Fed and the election are making everyone crazy. Look at what's happening today:

1. Election worries: The CBOE Volatility Index rose above 20 — a threshold level for many traders — on concerns the election is closer than it looked a week ago.
   - It's spilling into stocks, though it's not as easy to quantify. The Retail ETF (XRT) was down 4.7 percent in October and is down two percent again today. It's more than L Brands, which had disappointing guidance and is down 10 percent Tuesday. Sure, you can say online sales are getting bigger, but even analysts believe the election might beholding people back (Stifel, for example, cited "warm weather and distractions from the election" as factors for what they believe were "relatively weak" October sales).
2. The Fed isn't helping either. While bond yields have dropped midday on what appear to be election issues (the bet is that a Trump victory reduces chances for a Fed rate hike), the trend has been rising rates: The small-cap Russell 2000 is down five of the last six trading sessions, underperforming the S&P, to the lowest level since July. Small-cap stocks tend to underperform during periods of higher interest rates.
   - And other interest rate sensitive sectors are having a terrible time of it: a) the (HYG) is down five of the last six trading sessions, down nearly 3 percent, b) Real Estate Investment Trusts are at the lowest level since March, telecom stocks are near the lows of the year.

What's all this mean? It means we are caught in a situation where every markets report — from every commentator — is layered with a dose of political observation, and a dose of Fed watching. And those of you who want to talk about the earnings situation for the markets as a whole — or something equally relevant, such as wage growth — are just going to have to wait.