Friday, March 3, 2017

Trump Gives the Rally a Boost

The Trump rally that broke through 20000 on January 25 was losing some of its momentum as the administration appeared diverted into side issues and Congress and Republicans became increasingly divided on health care and taxes and anxious for direction from the White House.

President Trump’s well-received February 28 speech to the Joint Session of Congress was exactly the boost the market needed to break through the 21000 DOW milestone, done in a record 24 days. The market jumped 303 points and closed at 21115 on March 1.

The nearly 15 percent DOW climb since Election Day confirms that there was significant investor confidence being restrained by President Obama and Democratic Party economic policies. The investor and entrepreneurial community have reacted positively concerning Trump’s proposed regulatory relief, tax rate reductions and stimulus expenditure. The unified Republican government dramatically increases the probability it will happen and Trump’s business cabinet appointees reinforce the optimism. Hence, the most significant risk was Trump’s off-key behavior and the administration’s mixed five-week performance.

Wednesday’s breakout was preceded by 12 up days in the DOW. The last time we had 12 days of continuous up markets was 1987, the year the movie Wall Street debuted (“Greed is good, money never sleeps”). Other factors driving the confidence is a strong underlying U.S. economy, stable oil prices, moderate Fed interest rate increases and a good earnings season.

Rallies don’t last forever. The 59-day boost in 2007 preceded the Great Recession and 24-day run in 1999 was followed by the bust. The length and duration of the Trump rally is to be determined.

Gordon Gekko (Michael Douglas) in Wall Street | Pinterest

Read my blog: Trump Rally Breaks 20000 in Near Record Speed

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