He completely misses what is likely to be the most significant political event between now and the election--a beginning, if not an end, to the regime change in Iraq. Once this starts, expect the market to take off as the uncertainty ends, and the Dems chances to collapse.
Bingo! According to
Ha'aretz, the US in planning to attack Iraq in mid-August.
If that's true, then what you say holds, as well as a little distraction which will keep panicked investors from selling. In any case, even if the market begins an upswing in September, suddenly the GOP is in great shape.