Trump's win Surprised the Market

Trump's Win Surprised the Market

Nov. 8's Trump win surprised the world and market. After initial panic in overnight futures market, the USA market rebounded forcibly, leading by infrastructure and financial sectors, while FANGs ( Facebook, Amazon, Netflix, Google) and other tech stocks dropped without participating this Trump rally.

Before election, almost all pollsters predicted Clinton's win. Trump won electoral votes 290 over   Clinton's 232 while Clinton won popular votes 63 million vs. Trump 61.5 million by nearly 1.5 million votes. Most market watchers were wrong on election, but some very few were right:Jeffery Gundlach, Martin Armstrong, Sam Stoval, Jeffery Hirsch, and my friend Jone and Charles at Queens Flushing Library.

In fact, according to Sam Stovall's research, if S&P500 fell between August and October, historically, incumbent party will 83% likely lose election. This year from the end of July to the end of October, S&P500 dipped 2%, which again validated Stovall's findings.

Regarding two presidential candidates, I think that Mrs. Clinton is more qualified than Mr. Trump, consistent with the fact that more people in USA voted for Mrs. Clinton. Since 2000, I had been right on presidential election every time based on presidential debates, candidate's experience and demestic and international knowledge plus education background. This time I am wrong, even though Mrs. Clinton won 3 presidential debates by huge margin.  So why nearly all mainstream media were wrong on this election? As my friend Jone Bell puts, this is a revolution and a fight between social media and mainstream media with former winning out.

If social media won election and can impact other person's political views, we can believe that mainstream media will still have far more impacts on the financial markets than social media. This is because more informative people still regard mainstream media holds more power than social media in financial markets.

Back to the market, this Trump rally lacks FANG's participation and may send some signal for the market weakness ahead. But short-term market uptrend still has leg for two main reasons: 1. Market sentiment still not so hype; 2. Bullish market seasons--S&P500 sending bullish signal on Nov 7. right before election day, which may say that regardless of who wins presidential election, it is the time to be long the equity market.

Happy Thanksgiving Day to All.

Gunning Ju

A market analyst from New York