Have you heard about the latest dance craze sweeping the country? It’s called the Trump Bump, and it’s yuge! Simple to learn and so much fun. Everyone on Wall Street’s doing it.
The steps are easy:
Turn off cable news,
one two three,
hold your nose,
two three four,
buy some stocks,
one two three,
let them ride,
C’mon everyone, it’s the Trump Bump, and as long as you and your partner steer clear of the main stream media thrashing around the floor with their hair on fire, the dance is pretty safe and not too strenuous.
This promenade has been quite the phenomenon. The Dow Jones Industrials recorded twelve straight record closes to end February, and missed the all-time record thirteenth by just a whisker. It’s set over 30 new record closing highs since the Presidential election, and still counting. The media, who’s heads have been spinning like something out of the Exorcist ever since Trump rode down his escalator, would like us to believe we’re headed for some sort of Russian invasion or immigrant holocaust, but the stock market just keeps ignoring them.
There’s really been no magic formula or special gift to making money the past three months. The path to cash since Hillary’s prom night meltdown, when she threw her million dollar bottle of celebration champagne into a 150 inch ultra HD television set given to her by the Saudi Arabian government, has been to ignore cable news, hold your nose, buy the indexes, and sit on your hands. Please understand it doesn’t typically work this way, but the past eighteen months has been anything but typical. But if it makes us money, who are we to judge?
At Good Life the question we get today more than ever is when this unrelenting bull market will finally come to an end. That’s easy. The stock market will crash when everyone is all in. When your Uber driver is providing stock tips, when the television at Sports Clips is tuned to CNBC, when your Bunko group wants to start an investment club, or when your kids start asking about the stock market at the dinner table that’s when you will know the stock market has peaked, and it will be time to cash in your chips and quickly hit the Wall Street casino exit.
As market technicians, there are three pre-correction signals the top is finally in. 1) Volume tends to dry up as stocks move higher. On Wednesday the SPY broke to all-time highs on 50% higher than normal volume. 2) Financial and transport stocks will begin to fall dramatically, as they tend to lead markets both up and down. As of now, the financials and transports are at highs. And finally, 3) before a big correction, the stock market will typically experience some really ugly down days on heavy volume. A couple of these types of correction days within a week of one another and alarm bells start going off in our office. As of right now, there hasn’t been a meaningful down day since that crazy night in November. Don’t get us wrong, there are a few sectors that can’t seem to find the rhythm of The Bump, like the energy sector, but that’s about it. Everything else is out on the dance floor cutting a rug. We’ll let you know if we notice any of the three signals rear their ugly heads, but as of now we aren’t seeing the slightest hint.
So until then enjoy this latest dance craze while it lasts, because like all fads, this too will come to an end. Just be sure that when the music stops, you’ve already grabbed your coat and are almost to your truck. Because friends, you don’t want to be anywhere near the honky-tonk when this dance mania passes.
But for now, everyone grab your partner, doe-see-doe. It’s time for the Trump Bump!