In our October 30 edition of market outlook, we highlighted that several months of market consolidation coagulating just a few percent from market highs was a recipe for something big to happen with the presidential elections as the tipping point. Seismic and cosmic shifts were underway. Copper was breaking out, bonds topping, cash levels high and the market was looking technically weak.
We weren’t clear of the fundamentals but lesson learned from the trading pits is follow the tape and find the reasons later. Sometimes you get the trade right for the wrong reasons. Anyone who bought stocks expecting an easy Clinton win made good money for the wrong analysis.
The obvious conclusion based on market behavior before the election was that a Trump win would trigger a massive selloff. It did, but it lasted long enough to trigger a- 5% rout overnight until the markets opened here in the US. It then set off the shocker monster rally for US Equities. For most it was not enough time to book a profit from short plays.
That rally itself was a surprise and the standout winners even more so.  Here are some conclusions from early market “polls†by the end of this week.
First and foremost, domestic stocks as represented by the Russell 2000 (IWM) roared and put in its best performance in years up over 10% for the week. Regional banks rose over 15%. The Dow Industrials hit new all-time highs, up +3.96% for the week and now approaching 19,000.
Even more amazing is how the International equities market dropped with Mexico plummeting over -12.18 %.
The reaction on a worldwide basis was shock and awe in just how fast the US has shifted its political ideologies from classic liberal to alt-right. The global markets made a primal scream by yelling that Trump is good for the United States and bad for most of the world. Winner takes all. In the Asian region, only kangaroos and Aussie’s remained unscathed. And Russia, our new budding ally, was the big winner in Europe.
