The markets always go crazy close to an election point. At that time there is an instability in the system, people become irrational. The market tends to work as averaged over time. If you look at the graphs of the 2004 election you will see that Bush was leading the Iowa market MOST of the time, not ALL. If you average Bush's and Kerry's numbers over time you will see that Bush was winning. However, you have to disregard the last day.

Likewise in this cycle the Iowa Market for Democrats had Hillary Clinton leading by a large margin over most of the time. Based on that I think Hillary will win for the Democrats. If you look at the Republican Market Rudy was leading but it was not by much, and not that often, I think Romney will win.

I think people should wait until February 6 before disparaging the market system, which tends to be less volatile then the polls.