Will the Trump rally continue?


Retail investors typically pile into stocks in the fourth quarter, but are seasonals really enough to keep this skyrocketing market going?

Since Donald Trump won the US elections, it seems lot of investors are jumping on the bandwagon here. But how much will that make a difference to the overall stock market. So far we have seen a move of over 4% in the overall S&P 500 post-election. And there are a lot of things at play here over the coming months.

If we go back over 37 year, we are coming into a time where we see what is termed a Santa Clause rally. That just means that historically speaking this fourth quarter, that a lot of active traders or retail trader are coming back to the stock market and piling into stocks.

Just recently we have gotten some more positive economic data, Trump is urging to making America great again, and we still have the post-election euphoria going on at the moment. So we could see some more gains, into the end of the year, like we typically do.

It is wise to use a bit of caution as the markets run up a bit now since the US Elections was about a month ago! But still, investors seem to be quite bullish so close of the end of year.

If the market is set to move higher into the end of the year, where should the investor be looking. Some of the larger investors on wall st have seen the trend of higher markets into the end of year, and some possibilities would not to be looking at the strength, but take a more contrarian approach so to look to some of the sectors that have been beaten down, sectors such as the biotech, or the pharmaceutical sectors and some of the stocks, that are holding well. Stocks like Johnson & Johnson, Pfizer. These are some of the multinational companies that pay a very nice dividend. They have solid growth, and their P/E ratios are a lot lower than some of the sectors that have been skyrocketing.

If the market is really going to keep rallying into the end of the year. And if we really are in one of those situations of being in a SANTA CLAUSE rally, these stocks that are suppressed are more likely to pick up some steam, and get a second wind as we cruise into the next few weeks.

What is interesting at the moment is that the market has not stopped rallying for the last few weeks. This has not happened for a few years. So we will see where we end up. But one thing is obvious, all the naysayers that kept calling for a horrific stock market crash if Donald Trump got in, have not only been proved wrong, they have lots of money in the process. It seems we are now in an environment where people actually are starting to realise Donald Trump will not be so bad for the stock market and economy as a whole when he takes Oval Office in 2017. Time will tell if he actually follows through on his policies, but time will tell what is going to happen. We are always of the opinion to prepare for the worst and hope for the best.

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