Does a Santorum Win in the Michigan Primary Mean a Good Stock Market in 2012?

Contracts for a Santorum win in today's Michigan primary have moved sharply higher in price on Intrade.

Intrade is a prediction platform that allows users to bet on the outcomes of a variety of activities, from political races to box office numbers.

Users currently give Santorum a roughly 40% chance to win the Michigan primary. Although this is markedly less than odds given for Mitt Romney (65%) this percentage has steadily increased in recent days.

How does a Santorum win in Michigan equate to a continued bull-run in the stock market?

It is widely believed that Mitt Romney is the preferred candidate of the broader Republican establishment. While Romney's Republican critics may see him as too moderate to represent their party, he may ultimately have the greatest chance of defeating President Obama in his reelection bid this fall.

Santorum's strong stances may make him attractive to the more conservative wing of the Republican Party, and his social positions could help to energize an evangelical Christian base.

Yet, these positions may ultimately make him unelectable in the general election, as statements he has made on things like birth control and gay rights could turn moderates and swing voters away.

Thus, a Santorum win in Michigan, combined with an economy in the US that appears to be improving, could equate to an easy win for Obama. That level of certainty could support the markets.

Of course, the Michigan primary is but one contest and does not guarantee that Santorum would get the Republican nod. Still, Romney's case may look increasingly unlikely if he loses in Michigan.