It's over! The most protracted and expensive election in the nation's history has come to an end ... and an Obama victory in a landslide. There are several potential reactions by the stock market -- you would think a Democratic victory is already built into stock prices, but it is not -- remember, these analysts and money managers have been buying all the way down.

The Election Week Reaction

The larger issue for the market is how many Senate seats will the Democrats pick up and where will they finish? It looks now like 55-57 Senate Democrats. The market has partially discounted some of this possibility – but it could fall several hundred points with defense, health care and high-dividend stocks being hit the hardest.

This reaction will be very short-term -- maybe a couple of days. A knee-jerk reaction to the downside can make you some money by playing S+P (SPY) puts. But I am not a momentum guy, and I believe it will be easier to play Obama's first year in office.

7 Trades to Make After the Election

The good old US of A is dead-broke and getting broker. And this will handcuff the President Obama as will the sharpest recession since 1981-1982. Therefore, we need to explore who will be hurt by his election, not who will benefit from new spending as it will be negligible.

The bottom line here is to play the downside -- either an individual company in a sector that will be hit or an ETF for that sector.