Investors Are Anticipating Big Moves as Trump Takes Office Next Week
Bitcoin is already pricing in an expected favorable view on cryptocurrency from the new administration.
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Market participants are positioning for an eventful week when Donald Trump takes office on Monday. The market will be closed then for the Martin Luther King, Jr. holiday, so Friday is the last chance to make some moves before an onslaught of policy announcements.
The market is already reacting to a Bloomberg report that Trump will announce that cryptocurrency is a "national priority." Bitcoin IBIT has moved back over the key $100,000 level on that news, and miners are rallying as well.
The big question about Trump’s first day in office will be priorities. We know that tariffs will be a key issue for the market, but there is very little clarity about how the new administration will proceed. While there will be much talk about tax policy, immigration, and other issues, so far there is very little clarity about what initial moves will be made.
The DJIA and S&P 500 are working on their best week since the presidential election. There is optimism about a favorable reaction to Trump, and there is also a positive view of how earnings season will unwind. Inflation fears have subsided to some extent, and interest rates will be lower for the third straight session.
Technical conditions are aligning with the positive sentiment but the S&P 500 needs to move back over its 50-day simple moving average at 5962 to produce a healthier uptrend.
One concern is the underperformance of the Magnificent Seven MAGS on Thursday. The group lagged badly, with a loss of 1.9%, but the rest of the market held up well. If the Mag 7 continues to struggle, we will need stronger rotation into the broader market to offset the pressure. Rotation is good for stock pickers, and with earnings season upon us, there should be plenty of opportunities for astute traders.
Trading action on Friday is all about preparing for some fireworks after the three-day weekend. Make sure you are mentally and emotionally prepared for volatility.
At the time of publication, Rev Shark had no positions in any securities mentioned.
