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In a comment some weeks ago, I mentioned Donald Trump rather acerbically, knowing full well – after all, the polls said his opponent would win the race quite handily – that this strange man with his often unverifiable claims would never occupy the White House.How wrong I was, and what an impact his win has had on the markets.

The chart above of the S&P 500 illustrates a couple of things about the market and a way to play this phenomenon. For one, since the beginning of July the index has seen lower lows (noted in the chart). Just before the election, the second of those lows was broken; it dropped to 2080 – a significant decline from its previous high, and a probable indicator that the index was due for a drop.

So powerful was the Trump Jump that the chart gives a buy signal on the very day of his election (circled, in PPO line), and the markets haven’t yet looked back. The box, which I coloured in gold, shows the astonishing performance of the index during the last two weeks. The explanation is clearly that Mr. Market is expecting the Republicans to open the taps to free-market capitalism. The outcome should be rather astonishing, and I can illustrate that with yet another chart. In this case, the chart illustrates the recent performance of the XTN – a spider based on the NYSE’s transportation index. As you can see, ETN climbed an astonishing 10 per cent, compared to a modest uptick for the SPX .

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Well, to my mind this chart has been suggesting since last summer that the market was preparing to move upward – quite a different story from the one on display in the SPX, oddly enough.

This trend is not too clear in Canada yet, but it may soon take hold. Here’s a chart for Canadian Pacific (CP), which certainly seems to be on an uptrend:

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And here’s one for Westjet (WJAFF), which is being totally noncommittal.:

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