Trump Rally Not Because Of Trump After All?

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Includes: CRF, DDM, DIA, DOG, DXD, EEH, EPS, EQL, FEX, FWDD, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PPLC, PPSC, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWL, RWM, RYARX, RYRSX, SBUS, SCAP, SCHX, SDOW, SDS, SFLA, SH, SMLL, SPDN, SPLX, SPSM, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TALL, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, USA, USSD, USWD, UWM, VFINX, VOO, VTWO, VV
by: Elazar Advisors, LLC

Summary

We review some key indicators we track to tell us the market is doing just fine.

With this bounce back, this entire few months may not be just because of Trump after all.

There is a lot of negativity in the media. That's not a bad thing.

We wanted to review some key indicators we track which show the market is still looking pretty bullish.

AAII, Individual Investor Sentiment.

We always want to know where investors are sitting. We never found success however to use sentiment to catch peaks and troughs. What sentiment does tell us is if investors are catching on to the trend. If they are not, there may be more to go.

It's fair to say we are in a bull market, maybe a very strong bull market. That said investors are still not catching on.

Here's what AAII last said:

"Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.1 percentage points to 35.3%. The historical average is 38.5%."

The market is at all time highs yet the average investor is less bullish than the historical average.

Collectively investors have not yet bought into markets hitting new highs. That tells us there is still upside potential.

Market Moving Fast Or Slow?

When the market moves fast and volatile it is typically a sign of nervousness and bearishness.

This market is pretty quiet. Volatility did pick up in the last week. That's fair given it was the first major test of the "Trump Rally" with the first piece of legislation to (almost) hit Congress.


Chart By Interactive Brokers

Above is the S&P 500 ETF (NYSEARCA:SPY). You can see a very tight channel after a nice sell off.

That tight channel in simple trading terms is called "buying."

Again, this may be overly simplistic but again in trader terms, buying is... bullish.

That's core to our very proprietary model (buying is bullish).

Slow markets are typically bullish markets.

And for a plug and a toot, we told subscribers to buy Monday morning (pay wall) after saying to go short Thursday near the close (pay wall).

The market ate up the Trump "bad news" and quickly went back up. That needs to be noticed as "bullish action" on bad news.

Not Just The Trump Rally?

This part starts to get exciting (if you weren't totally excited already).

The Trump Rally was based on Trump, right?

But President Trump was unsuccessful in his first major piece of legislation that needed to pass Congress.

That implies that investors who solely bought for pro-business legislation should be very worried about future legislation.

If this rally was all because of Trump we wouldn't have seen such a swift snap back.

Those who sold because of pro-business legislation risk sold for a few minutes but other buyers came in and sellers bought again. That was fast.

That tells you that this rally is not just Trump.

Ponder that idea for a second.

Markets are going up because (trader analysis here) they want to go up.

The Trump Rally may not be because of Trump after all.

Lots Of Bearishness In The Media

We don't want people to look bad so we won't say who is saying what. You can peruse the media yourself. But scanning the titles of reports and calls each morning surely has a bearish bent.

Bearishness and calling tops near all-time highs is not bearish, it's bullish.

Here are some titles we saw in the last couple of days.

"Heading For A Correction."

"Stocks In Correction For Months."

After the two-day rally off the Monday's 9:30 low,

"Trump Trade Slipping."

"Trump Trade Fading."

"Markets Could See Heartbreak if Brexit..."

Most of the articles out there have a bearish bent.

That's a lot of bearishness for being 2% from the high, wouldn't you say?

That's bullish.

Conclusion

While President Trump still gives us permission to call this the "Trump Rally," there may be more to this rally than Trump. Markets may have proven that this week so far. That is pretty big news. The market is going up (deep trader analysis here) because it wants to go up. That's bullish.

Trump Disclosure:

President Trump, we love ya.

Disclaimer:

ETFs reported by Elazar Advisors, LLC are guided by our daily, weekly and monthly methodologies. We have a daily overlay which changes more frequently which is reported to our premium members and could differ from the above report.

Portions of this article may have been issued in advance to subscribers or clients. All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SPY, BUT THIS COULD CHANGE AT ANY TIME SO DON'T GET TOO SOLD ON THIS DISCLOSURE. WE COULD TURN AROUND AND SHORT IF WHAT WE SEE CHANGES over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.