Trump Stirs Up the Animal Spirits
Bears will argue that it is irrational and unjustified action, but 'spirits' are a very powerful thing.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The market looked like it was ready to rest on Thursday morning, but a very upbeat and optimistic Trump speech at the World Economic Forum ignited buyers and produced another solid day of gains. There was a late surge that pushed all the indexes to the highs of the day at the close.
The Russell 2000 small-cap index IWM led the charge with a gain of 1%, while the Nasdaq 100 QQQ and Magnificent Seven MAGS lagged and managed small gains at the closing bell. Breadth was 5,700 gainers to 3,800 delivers and over 400 new 12-month highs.
Trump didn't announce anything new in his speech but his confidence about producing strong economic growth while battling inflation is what buyers want to hear. Whether he will be able to accomplish that, we will see, but his decisiveness and fast action are giving him credibility.
Trump did announce a Bitcoin strategic reserve, but that was anticipated and did not significantly impact Bitcoin IBIT.
There was some very good small-cap action. The biotechnology sector IBB, which has been lagging badly for quite a while, perked up nicely and closed over the 50-day simple average for the first time since November 11. I’ve heavily leveraged to this sector and am looking to add exposure if this move holds.
There wasn’t any specific news to drive the strength Thursday, but it was a good example of "animal spirits." The market mood is very positive, traders are making money, and the economic narrative is upbeat. The bears will argue that it is irrational and unjustified action, but animal spirits are very powerful and can persist far longer than you think is reasonable.
Have a good evening. I’ll see you Friday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
