Markets Higher After Trump Victory

In my article that I published yesterday, I examined the hypothesis of whether knowing in advance how the markets are forecasted to behave following the announcement of the results of presidential elections, would allow anyone to make a conclusion about who would win the elections. This, as you recall, was the converse logic of the hypothesis that if Clinton would win the elections, markets would rally.

The reference point was our proprietary Master Market Forecast (MMF) that clearly showed US equities rallying for the two days following election day. Below is the SPX500 chart that you saw yesterday.

And below is the updated chart from this morning.

It is true that futures markets reacted very negatively when votes were coming in last night showing a Trump lead, with the S&P futures falling by around 107 points and the Dow Jones futures shedding around 870 points. However, that mini-crash was only temporary because, as I told you yesterday, the markets had to rally today, no matter who wins the elections and no matter what else happens anywhere else in the world! 

Sure enough, the markets obeyed and made an unbelievable rebound to not only claim back what they shed last night but to even push higher today. You see, markets will do what they are meant to do regardless of people's logic, analysis, and conventional wisdom, and this is what most people do not get. 

In conclusion, there are two lessons that we have learned from testing the above hypothesis. The first lesson is that the converse of the original hypothesis is not necessarily true, as we all saw the markets rallying very nicely in spite of a Trump win. The second lesson is that "truth is singular" and, as such, markets have no other choice but to comply with what they are supposed to do, regardless of conventional wisdom or whatever happens anywhere in the world.


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