Post-Election Market Update
Well, a man who I assumed was a joke candidate will soon be President of the United States. Call it a win for life’s beautiful ironies and paradoxes that a billionaire has won the Presidency on wave of populist rhetoric. So it goes. What does it mean for markets? Who knows. But I’ll do my best to cycle through some of the major market charts.
Despite my pessimism regarding the larger state of neoliberal capitalism and the array of macro-economic warning signs to be found in social and capital structures, the equity markets looked poised to breakout with a Clinton win. Trump’s upset victory sent global markets into a bit of tailspin. Then U.S. equities rapidly recovered, pushing to new highs. In keeping with Trump’s promise of building out infrastructure and quashing global trade deals, there has been a somewhat predictable divergence within U.S. markets. Industrial stocks have markedly outperformed the tech darlings that rely more heavily on unified global markets. So let our tour begin.
The S&P (SPY) has pushed to nominal highs, though not (yet) to a level indicating a full-on “breakout.”
Presumably driven by the prospect of immanent infrastructure work, the Dow Jones (DIA) appears to be a classic “breakout” after almost two years of sideways consolidation. I have entered a double-long position on the Dow (DDM).
The Nasdaq (QQQ) has markedly underperformed its U.S. equity peers. I imagine newfound risk to global trade deals is pertinent, as is the technically relevant observation that Nasdaq is trading at the old highs of 2000. Hello, resistance. Seems like a good time for a pairs trade: long Dow, short Nas.
The most significant movement post-Trump has come in the currency and bond markets. The Dollar (UUP) rallied violently on Trump’s hawkish talk, and is testing long term resistance levels.
Long term U.S. Treasuries (TLT) sold off quite precipitously and are testing a rising support trendline in place since around 2008. It may be an interesting buy point here. TLT is sitting near its 200 week moving average, with a support exit nearby and current sentiment quite bearish.
Global markets (VEU) and emerging markets (EEM) show similar patterns, with rising support trendlines in place and resistance overhead. There was a bullish “reverse head-and-shoulders” shaping up, but it hasn’t played out very cleanly.
One asset that remains intriguing to me is gold. My particular angle of interest has been miners, since they were drubbed so terribly from 2010-2015. After the significant breakout of gold miners early this year, the junior miner index (GDXJ) has now pulled back 50% off its rally top. It is a standard Fibonacci retracement, and after offloading most of my GDXJ shares in the 40’s, it may be time to reload a bit here.
I am not committed to bullishness, so I have taken a short position on one the leading auto loan providers, Ally Financial (ALLY). Ally is apparently of the leading providers of student and auto loans, which strike me as an inevitable calamity just waiting for a catalyst to ignite the trash heap. There is a possible triple top here. I don’t plan to stick around if there is breakout above this resistance level.
Well, that’s all for now. Happy trading all.