Election Result and the Market Surge: What’s Next?
The election was short and to the point. Trump took the lead and never looked back. I think in some ways we were all a little bit on edge about this being drawn out as to who would win a contested election, but that was not the case. For the second time in his life, Donald Trump has the title of “President-elect,” and from now on history students will learn the name of Donald Trump, along with Grover Cleveland, as Presidents who served non-consecutive terms.
Chart: BITB, XLF, TSLA 1-year daily
I was asked a number of times if we were going to reduce exposure to equities due to all the election uncertainty, and of course, my answer has remained “As long as the HCM-BuyLine® is positive, we stay invested.” The markets started moving up first thing yesterday morning, which was a surprise, but markets know things a lot sooner than everyone else, and yesterday they signaled a big Trump win. Today, the market has roared higher as animal spirits have taken over. Bitcoin really jumped, and we have a lot of breakouts, and everyone knows I love breakouts. The Bitcoin ETF (BITB), Financials (XLF), and Tesla (TSLA) are just a few, and there are plenty more today. Look for the markets to continue to move all the way to year-end.
There is a tremendous amount of cash on the sidelines, as indicated by The Saint Louis Federal Reserve web page FRED. Why so much cash? One word: uncertainty. Now, investors know what to expect and can make informed decisions about their investments. This is one of the largest cash build-ups I have seen, as a lot of investors were sitting it out to see who would win. We should start to see this cash start to move back into the market, and it will push stocks much higher.
