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New Political Landscape After 2020 General Election In US Means Major Changes In Market Environment

JC ROCHESTER profile picture
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  • First year of a new US presidential term tends to be lackluster on a buy-and-hold basis {2021-01-01 through 2021-12-31}.
  • Aggressively pro-growth policies from prior administration will get overthrown, thereby curtailing extraordinary momentum of the Growth sectors prevailing in the past 4 years to much lower levels going forward.
  • Return to more onerous regulations from the federal government on small businesses is forth-coming.
  • Likely range-bound market in the US is expected to provide more opportunities for short-term cycle trading (i.e. holding period up to 3 months).
  • Emerging markets, especially Asia, will continue to out-perform US on a buy-and-hold basis since summer of 2020.

As noted in past posts, February has seasonally been an unfavorable month with high consistency. Accordingly, those who have accumulated colossal gains since the bear market bottom in 2020-03 may wish to consider harvesting some of them in retirement accounts or selling covered calls in taxable accounts, best conducted on big rally days that are often characterized by {R14+, K+, ADD+900}.

A potential, protracted pull-back in the near future would often be preceded by the -dvP formation on the Daily chart or wX-down on the Weekly chart.

EMA50 is expected to provide firm support for all major indices on first test near the end of the down cycle.

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