The Trump Put lives!

January 22, 2025 at 16:09 PM EST

Mid-week market update: Trump promised a flurry of executive orders to implement his campaign promises on the first day he took office. Amidst the flurry, the market breathed a sigh of relief as there were no major risk-off catalysts. The market is apolitical and it doesn't care about the reversal of DEI policies, or whether a mountain in Alaska is named Denali or McKinley. Although there were threats of 25% tariffs on Canada and Mexico, and a 10% tariff on China, both to be put in place on February 1st, there were no instant tariffs that would have rattled markets.
Trump showed during his first term that he cared about the stock market. As he begins his second term, the Trump Put seems to be alive again.
As a consequence, the S&P 500 is testing its all-time high at about 6100. Even though readings are overbought, this could be a "good overbought" advance that takes the market to new highs, with upside potential at the dotted resistance line measuring at about 6300 by the end of January. On the other hand, it's disconcerting to see a breadth indicator such as the percentage above the 20 dma (bottom panel) fall on a day the market is testing its all-time high.

Here are the bull and bear cases. The full post can be found here.

The Trump Put lives!

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