MARKETS UPDATE (9:00 pm EST)
Donald Trump Wins the Election and Will Be the Next U.S. President
Donald Trump's victory last night was truly a "Brexit" moment. As with the U.K.'s decision to leave the European Union earlier this year, Trump's win came as a surprise and shock to the mainstream media and many political analysts. Britain's Brexit vote reflected the average working class citizen's deep dissatisfaction with a government and politicians that they felt were corrupt, out of touch, and not working for them. There are many people in this country (both Democrats and Republicans) that feel the same way, and I believe this sentiment contributed strongly to Trump's win. (This dissatisfaction with establishment Washington politicians also fueled the enormous popularity and success of Bernie Sanders in his run against Hillary for the Democratic nomination). The one thing that both Republicans and Democrats can agree on is that Donald Trump is an outsider entering the political arena for the first time. His detractors say that this inexperience makes him unfit to be president, but his supporters see this as an asset that will give him a refreshing objectivity. Will things change for the better under Trump's presidency? Only time will tell.
Following the election results late last night, overnight equity markets plunged but curiously recovered and rallied strongly today with the DOW gaining 257 points at the closing bell. Many (including myself) had expected a Trump victory to send the markets down as Wall Street does not like uncertainty, and Trump, a political newbie and often outspoken and controversial personality, was certainly a "wild card" factor here. In his acceptance speech, however, Mr. Trump was even-tempered, conciliatory, and actually "presidential". This may have calmed investors a bit. The fact that Republicans also won and will retain control of both the House and Senate may also help stabilize markets as a "clean sweep" victory of one party makes it easier to predict the direction of future legislation and policies. (Remember, markets don't like uncertainty). Despite today's strong rally, it is too early to judge the full impact of Trump's victory on the markets. It is quite possible that last Friday's lows in the DOW and S&P 500 were medium-term cycle bottoms and that we are now starting new cycles. This is supported by the fact that the DOW today broke and closed above that strong resistance zone at 18,400 - 18,450. If this analysis is correct then we should be looking to go long; however, the broad stock market could still be volatile over the next few days as investors mull over the economic ramifications of a Trump presidency. Let's stay on the sidelines for now and see how prices move into the end of the week.
Gold and silver's reaction to the election was the opposite of equity markets. Prices surged overnight on the news of the Trump win but then fell back strongly today. Over the last two days gold has made a new weekly low as well as a new weekly high while silver made a new weekly high today. Neither metal has taken out its October low so it is still unclear if these new cycles are going to be bullish or bearish. Friday or next Monday could be a significant turning point for gold and silver, but the next major reversal zone for precious metals is at the end of the month. Because the trend here is not clear, I am going to remain on the sidelines of gold and silver for now.
Crude oil prices have rallied a bit this week, but last week's steep fall and last Friday's break slightly below the Sept. 20 subcycle bottom ($43.77 - Dec. contract chart) suggests that this cycle may be turning bearish. Prices may move lower into the next reversal zone for crude at the end of this month. If so, we will consider going long. If instead we see prices edge higher over the next two or three weeks, we will consider selling short. Still on the sidelines of crude.
Donald Trump Wins the Election and Will Be the Next U.S. President
Donald Trump's victory last night was truly a "Brexit" moment. As with the U.K.'s decision to leave the European Union earlier this year, Trump's win came as a surprise and shock to the mainstream media and many political analysts. Britain's Brexit vote reflected the average working class citizen's deep dissatisfaction with a government and politicians that they felt were corrupt, out of touch, and not working for them. There are many people in this country (both Democrats and Republicans) that feel the same way, and I believe this sentiment contributed strongly to Trump's win. (This dissatisfaction with establishment Washington politicians also fueled the enormous popularity and success of Bernie Sanders in his run against Hillary for the Democratic nomination). The one thing that both Republicans and Democrats can agree on is that Donald Trump is an outsider entering the political arena for the first time. His detractors say that this inexperience makes him unfit to be president, but his supporters see this as an asset that will give him a refreshing objectivity. Will things change for the better under Trump's presidency? Only time will tell.
Following the election results late last night, overnight equity markets plunged but curiously recovered and rallied strongly today with the DOW gaining 257 points at the closing bell. Many (including myself) had expected a Trump victory to send the markets down as Wall Street does not like uncertainty, and Trump, a political newbie and often outspoken and controversial personality, was certainly a "wild card" factor here. In his acceptance speech, however, Mr. Trump was even-tempered, conciliatory, and actually "presidential". This may have calmed investors a bit. The fact that Republicans also won and will retain control of both the House and Senate may also help stabilize markets as a "clean sweep" victory of one party makes it easier to predict the direction of future legislation and policies. (Remember, markets don't like uncertainty). Despite today's strong rally, it is too early to judge the full impact of Trump's victory on the markets. It is quite possible that last Friday's lows in the DOW and S&P 500 were medium-term cycle bottoms and that we are now starting new cycles. This is supported by the fact that the DOW today broke and closed above that strong resistance zone at 18,400 - 18,450. If this analysis is correct then we should be looking to go long; however, the broad stock market could still be volatile over the next few days as investors mull over the economic ramifications of a Trump presidency. Let's stay on the sidelines for now and see how prices move into the end of the week.
Gold and silver's reaction to the election was the opposite of equity markets. Prices surged overnight on the news of the Trump win but then fell back strongly today. Over the last two days gold has made a new weekly low as well as a new weekly high while silver made a new weekly high today. Neither metal has taken out its October low so it is still unclear if these new cycles are going to be bullish or bearish. Friday or next Monday could be a significant turning point for gold and silver, but the next major reversal zone for precious metals is at the end of the month. Because the trend here is not clear, I am going to remain on the sidelines of gold and silver for now.
Crude oil prices have rallied a bit this week, but last week's steep fall and last Friday's break slightly below the Sept. 20 subcycle bottom ($43.77 - Dec. contract chart) suggests that this cycle may be turning bearish. Prices may move lower into the next reversal zone for crude at the end of this month. If so, we will consider going long. If instead we see prices edge higher over the next two or three weeks, we will consider selling short. Still on the sidelines of crude.
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