Short SPX given the break in the long-term trend established since Feb 2016. The long-term trend has broken.
This run-up is simply a retest to the trend, before heading lower.
2 Primary reasons why:
1. The honeymoon phase with Trump will come to an end*; and,
2. The Fed will raise rates in December, adding headwinds to an overpriced market.
*The Dow reached a new high today, while the SP 500 was relatively flat and the NASDAQ dropped 0.8%. This difference underscores investors shift in focus after the election of Trump. Primarily, investors are shifting their portfolio to Industrials, Financials, and Bio-Techs which are perceived to outperform under Trump. Once this reallocation completes, most investors won't speculate until after the inauguration. In the meantime, the market's will work to reprice assets given the impending Fed rate increase and uncertainty surrounding the Trump victory.
This run-up is simply a retest to the trend, before heading lower.
2 Primary reasons why:
1. The honeymoon phase with Trump will come to an end*; and,
2. The Fed will raise rates in December, adding headwinds to an overpriced market.
*The Dow reached a new high today, while the SP 500 was relatively flat and the NASDAQ dropped 0.8%. This difference underscores investors shift in focus after the election of Trump. Primarily, investors are shifting their portfolio to Industrials, Financials, and Bio-Techs which are perceived to outperform under Trump. Once this reallocation completes, most investors won't speculate until after the inauguration. In the meantime, the market's will work to reprice assets given the impending Fed rate increase and uncertainty surrounding the Trump victory.