After the US election and Donald Trump getting elected, and investors watching the market skyrocket to new highs in a matter of weeks. Is this all just a false rally? And is the bull market finally coming to an end?
These are very interesting questions. We have just witnessed a rally we have not seen in over 40 years. It’s quite historical. Mix that with the stock market, very close to the 20,000 level on the DOW, a level many top wall st traders say is a very psychological level.
The Stock market is not the only huge rally we are seeing, the US dollar is up 20% in a few months, after the fed decided to hike interest rates by a quarter point, and upped its forecast for the 3 hikes in 2017. That means, we could be looking at the very beginning of interest rates lows, and before we start to see the fed hike rates over the next few years.
Many top analysts feel that stock traders have been looking over the shoulders recently at bond yields, fearing bond devils run rates up so much that the stock market gains are now going to be choked off. Still even though the stock market has had a few down days, the momentum still seems to be on the upside. It seems buying momentum has not slowed down at all.
The market may be on the move, but some strategists on wall st are saying this Trump rally is getting a little bit long in the tooth, and telling their members that stocks cannot keep going up in a straight line for months on end. Eventually we have to pause or even seeing some sort of correction.
Let’s be honest, that the speed of this rally on the stock market has not only been historical, it’s been a little surprising. So in a way, there are certainly risks to the upside when you look at the stock market, and where have come from, and where we are right now. It’s probably much better to wait until Donald Trump is sitting in his chair in the White House giving orders, and to see how some of his fiscal policies are going to be implemented in 2017.
If Donald Trump cannot deliver on some of his promises, this is not only going to be very bad, it’s going to make investors feel uncertain, and when investors get nervous and feel uncertain about the economy or the stock market, that is usually a clear sign they will want to sell, and it will obviously put a stop to the current bull market rally. So at this stage of the race, it’s probably a wise move not to get excited here.
Normally when people get excited and start selling their house, car and kids to get long the market, that is a sign they are too late to the party, and you might want to take notice of this too, so you do not get caught up in too much of the hype yourself.