Here's Where the Market Stands as Trump's Second Term Begins
Stocks have one big positive going for them now — but the key to it all is this.
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Market action was positive but very dull on Friday as investors await Donald Trump’s inauguration on Monday. The market mood is upbeat, which is reflected in better than 2 to 1 positive breadth and 330 new 12-month highs, but there is a tremendous amount of uncertainty about what actions Trump will take immediately and what the impact will be on the market.
In addition to hundreds of executive orders from Trump, there will be a flood of earnings reports as well. There is sure to be some good news and bad news, which will produce higher levels of volatility.
One big positive is that technical conditions are supportive of more upside. Worries about inflation dissipated this week, and interest rates had their biggest drop since early December. Bonds look like they have some support, and that is the key to the market right now. There is a high likelihood that some of Trump’s aggressive economic policies may raise fears of inflation again, so it will be important to keep an eye on bonds.
There was a strong rally after the election back in November due to increased optimism, but most of those gains and more were given back. The indexes found their footing early this week and then bounced up as that optimism started to rebuild in anticipation of the new administration taking office. If Trump makes market-friendly moves the charts are in good shape for some significant upside.
The one thing we can count on next week is a tremendous amount of news flow, which will produce increased volatility.
Don’t forget we are closed on Monday. I’ll see you on Tuesday morning.
At the time of publication, Rev Shark had no positions in any securities mentioned.
