Hey Market Pilots,
The last few days have shown that we have to be prepared for anything to happen in 2020. Yes, there are only about 80 more days but with the rollercoaster of the COVID pandemic now reaching President Trump himself, why shouldn’t we expect aliens to visit too? Oh wait, they apparently did.
Watching the various reactions of Trump getting COVID and apparently getting through it with relative ease has been an interesting experience in seeing how quickly paths can change. Now that we are past it and the market seems content, it can be easy to look back and barely see a blip on the charts. But if his health had taken a turn for the worse, I think the market would have responded similarly.
Whether you like Trump or not, having a president become medically incapacitated a month before an election would be an absolute mess. The market doesn’t like uncertainty, and this would be like putting the market in a dryer on tumble mode. If we thought the back and forth news about the stimulus was sloshing the market around, wait until we would have heard the various reports of his health from day to day and what that could have done to the volatility of the market.
It is a bit surreal how it all came about too, from a market perspective. The news came out Thursday, so the market was super heavy Friday even though they tried to throw in some Stimulus Package fluff news. By the time the futures opened Sunday evening, better news about Trump was coming out and Monday was a great day because he left the hospital. For my own self-interest, and desire to avoid chaos, I am really happy this all occurred over the weekend while the market was closed.
Despite the potential for this event to really mess the market up and cause it to go a very different way, the only thing we really saw was the SPY pullback to the Hourly 50 SMA and bounce exactly off it. I often write about which came first, the chicken or the egg? This is yet another example of that within the market. I had been saying for days (ever since price crossed over the Hourly 50 SMA) that I needed to see the SPY pullback and touch the Hourly 50 SMA. Never in a million years would I have expected the “reason” for that to happen would be Trump getting COVID.
So how was it that a relatively predictable technical pattern, which I was expecting and communicating to my subscribers to watch for, happened because of the most random of news events? Would it have happened without the Trump news? It really just reinforces the understanding that anything can happen in the market and we need to accept that.
Assuming Trump continues to recover and there are no other medical issues, I imagine he will use this experience as strength for his campaign and probably a stronger push for the economy to return to normalcy. Well, as normal as we might be able to expect after living with a pandemic for the better part of a year.
Since we are traders and we are here to make money, let’s consider what effect this may have on the market. My assumption is that the market will like it. The biggest reason is because of the status quo. No massive uncertainties with Trump himself, no unplanned changing of the guards. It also demonstrates that we may actually be doing pretty well with managing COVID. Trump’s fast recovery could help calm society and get businesses back online, with the right amount of precautions. If we keep putting one foot in front of the other and things don’t get any worse, then the market should respond favorably.
Once again, anything can happen. It’s 2020 after all. I know I will be 100% cash surrounding the election but until then, I think we just gave the market some reason to be positive and provide us a little boost to our accounts. We are here to succeed in the markets while life goes on around us.
Over and Out,
Your Profit Pilot