It is no secret that President Trump watches the stock market. It is less well understood that he has an uncanny sense of stock market timing. Every time stocks seem poised for a big drop, he says something to reverse the tide. He then follows through with more statements to extend the bounce.
I am politically agnostic. My sole job is to help investors. Having said that, even opponents of Trump with some objectivity ought to give him credit for his sense of market timing. Regardless, here is the key question: “What do all these gyrations mean for the stock market?” Let’s explore with the help of a chart.
Please click here for an annotated chart S&P 500 ETF SPY. Investors with a heavy concentration in technology may consider Nasdaq 100 ETF QQQ.
Note the following:
• The chart shows the support zone. To learn why investors should use support zones and not just specific support levels, please see “Why you need to understand support zones in the stock market.”
• The chart shows that when the stock market swooned on concerns related to the inverted yield curve, it did not even penetrate the support zone. This is a big positive for the stock market.
• The stock market has mostly recovered from the swoon primarily due to Trump’s statements.
• The chart shows the Arora buy signal given on Christmas Eve that has turned out to be the low of this cycle.
• The chart shows four Arora signals given before the recent market drop to take profits on select positions, protect long-term portfolios with hedges, take profits on a position in China ETF ASHR and do a short-term trade. The short-term trade was to short-sell Nasdaq 100 ETF or buy leveraged inverse Nasdaq 100 ETF SQQQ for those who could not short-sell. SQQQ is an inverse ETF that goes up when the stock market goes down. Profits have now been taken on this short-term trade. New short-term trades on bond ETFs TLT and TBT have been started.
• The RSI (relative strength index) shows that, from here, the market can go either way.
• The chart shows churning with high volume. This indicates indecision. Right now volume shows that bulls and bears are in balance but both have higher conviction than before.
• Apple’s AAPL stock is in the crosshairs of the trade war. However, Apple has rallied on the strength of Tim Cook having dinner with Trump, and Trump understanding that Chinese tariffs may put Apple at a disadvantage compared to Samsung SSNLF…Read more at MarketWatch.
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