The Weekend Edition is pulled from the daily Stansberry Digest.

This week's midterm elections played out largely as expected...

 Republicans held onto the U.S. Senate, even managing to gain a few seats in the process. Democrats regained control of the House of Representatives. And both sides were able to claim a victory.

As regular readers know, we had no "dog" in this fight. We're no fans of politicians of either stripe. But we will note that the markets appeared to be pleased with the results...

All three major U.S. indexes gapped up at the open Wednesday following the election results and continued higher all day. Both the Dow and the S&P 500 surged 2.1%, while the tech-heavy Nasdaq Composite led the way with a gain of more than 2.6%.

Our colleague John Gillin summed up the bullish argument for Stansberry NewsWire readers...

For months, the scenario that has been bandied about was that the Dems would take the House, and the Republicans would gain Senate seats. Lo and behold, the prognosticators nailed it.

It's common knowledge that a split Congress has, historically, been a good setup for markets. There is now a better chance to get an infrastructure deal done. Neither party wants to own it, but they realize that a bridge collapse on their watch would be an utter disaster on so many fronts.

Markets climb a wall of worry, but hate uncertainty. The elections, thankfully, are now behind us. But there remain tariffs, emerging markets, global growth slowdown, Fed moves, and debts coming due. Thus, plenty to worry about...

History says this is a positive.

John is right... Not only has congressional "gridlock" typically been considered a positive, the 12 months following midterm elections has been an incredibly bullish period – regardless of outcome – over the past 70 years.

But this isn't the only good news for stock market bulls...

Regular readers will recall that debt-fueled corporate share repurchases – or "stock buybacks," as they're more commonly known – have been among the biggest drivers of higher stock prices over the past few years.

This trend can't go on forever. But for now, it's showing no signs of stopping. In fact, after the usual slowdown prior to earnings season in September and early October, buybacks are now accelerating once again. As the Wall Street Journal reported...

Net buybacks in the month totaled just $12 billion by October 19, but jumped to $39 billion by October 29, according to estimates from JPMorgan Chase. That is more than the $30 billion recorded in September and just under the $48 billion recorded in August.

The pickup came at the close of a month that wiped more than $4 trillion in value from stocks in the U.S., Europe and Asia... That swoon has accentuated interest in buybacks.

Cosmetics firm Estée Lauder, whose shares dropped by as much as 14% during October, on Wednesday announced plans to buy back 40 million shares, or 11% of the total outstanding... Semiconductor-equipment maker Rudolph Technologies, based in Massachusetts, pointed to "undervalued market conditions" on Monday as it announced it had spent $14.3 million completing a buyback plan... This past week, International Business Machines authorized $4 billion worth of buybacks, and financial-exchanges operator Intercontinental Exchange announced a plan for repurchases worth $2 billion.

Still, we may not be out of the woods just yet...

 Our proprietary Complacency Indicator shows that despite the sharp correction in stocks last month, investors remain extremely complacent today. In fact, unlike most corrections we've seen, investors actually became less fearful as stocks fell...

If you're not familiar, this indicator is a composite of several different measures of market fear that Stansberry Research founder Porter Stansberry and the Stansberry's Investment Advisory team developed back in 2014.

In short, based on decades of back-testing, whenever this indicator drops below a key threshold – represented by a score of less than 30 – it suggests a market correction of 10% or more is likely within the next 12 months. And it has been remarkably reliable...

While it hasn't predicted every recession, it hasn't produced any false signals, either. Every time it has triggered, the broad market has in fact declined at least 10% over the next 12 months.

This indicator was last triggered in September. As Stansberry's Investment Advisory senior analyst Brett Aitken explained in the September 11 Digest...

This month, the indicator dropped to 23. And it moves our primary indicator from "Neutral" to "Bearish."

While we consider this our primary sentiment indicator for the market as a whole, we can't know exactly when the correction will arrive. based on almost 30 years of history, it will be in the next 12 months.

At that time, the Complacency Indicator had correctly predicted eight of the last 10 corrections, including February's "volatility panic"...

As of last week, we can now officially add one more to the list. As Porter and analyst Alan Gula explained in the November issue of Stansberry's Investment Advisory...

Our indicator correctly predicted another correction. Recall that our indicator began flashing a warning signal in September when the complacency score fell to 23. And last month, it dropped further to 11. Investors had become extremely complacent. As you know... this is a bearish warning...

The benchmark S&P 500 reached an all-time high on September 20. By Monday this week, the index closed nearly 10% below that high, flirting with 11% lows during the day. The Nasdaq Composite Index was down as much as 13% in that same time period.

Including the two corrections it correctly predicted this year, our Complacency Indicator has now accurately predicted nine of the past 11 corrections. Hopefully, you heeded its warnings and maintained a hedged portfolio. Short positions, including buying put options, can insulate investors from market shocks.

Porter and Alan also noted that while the recent correction did officially meet the 10% minimum threshold, they're not quite ready to call the "all clear." You see, this indicator says investors are still extremely complacent right now...

You may be surprised to learn that, despite the recent sell-off, the complacency score remains dangerously low today at 8.

This doesn't mean the market will necessarily fall further. But it's a good reason to remain cautious and hedged.

Again, this doesn't necessarily mean stocks will fall further from here, but we can't rule it out.

For now, our advice remains the same: Stay long... stay smart (hold some extra cash and gold, and consider "hedging" if you have a significant percentage of your portfolio in stocks)... and keep a close eye on your trailing stops, just in case.

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