[ad_1]
First of all, I am politically agnostic. My only job is to help investors. This column is neither for nor against President Trump.
The Dow Jones Industrial Average
DJIA, + 0.93%
would have been 10,000 points higher if President Trump had not done the "right" thing. Obama, Bush and Clinton should have done it, but they did not do it. What is the good thing? Resist China. Before sending me hate mail, understand that these are not my words. I paraphrase what Trump said.
Is Trump right? The answer to this question helps investors understand what can happen to the stock market if the trade war with China is resolved. Let's look at a table.
Graphic
Click here to view the annotated table of the Dow Jones Industrial Average ETF.
DIA + 0,90%.
Investors should use the tables of the S & P 500 ETF index
SPY, + 0.81%
and Nasdaq 100 ETF
QQQ, + 0.89%
instead of the Dow ETF. The Dow Jones Industrial Average chart is used because that's what Trump mentioned.
Note the following points:
• The graph shows a trend line from the Arora buy signal. When Trump won the elections, most sources predicted a major fall in the stock market. at that time, the Arora report gave a buy signal. The signal was not a Trump endorsement but simply based on our proven algorithms.
• Examine the right side of the graph to see where the trend line is. The trend line shows that if the trend had continued, the Dow Jones Industrial Average would have stood at 31,000 points at the moment. That would have made Trump half right.
• The graph shows the beginning of a parabolic phase in the stock market.
• The parabolic phase would probably have continued without some policies adopted by Trump.
• The graph shows the failure of the parabolic phase.
• Based on my more than 30 years in the markets, I can say with certainty that more likely than not, another parabolic phase could have started on the stock market if it was not for the war trade with China. After all, this market is controlled by the momo crowd (moose).
• A successful parabolic phase would have brought the market higher by 7,000 to 10,000 Dow points. That would have made Trump 100% fair.
• Without a commercial war, it is likely that to date, Apple
AAPL, + 1.08%
stock would have been at $ 260, Facebook
FB -0.14%
at $ 250 and Amazon
AMZN, + 1.23%
at $ 2500. Among the semiconductor stocks, Intel
INTC, + 1.18%
would have been at $ 60, AMD
AMD + 3.19%
at $ 40 and Micron Technology
MU, -0.14%
at $ 65.
• The largest Chinese e-commerce stock, Alibaba
Baba, -1.11%,
would probably have been $ 250 now if there was no trade war.
Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.
fundamentals
You may now think that technicians support Trump, but what about fundamentals? When the Dow Jones Industrial Average was at 16,000, I was preparing a scenario for Dow's 30,000. I've repeated this call several times. For example, please see "This is the case of Dow 30,000 in Trump's first term".
Here's a quote from one of my previous writings: "Earnings growth is the single most important factor in the long-term direction of equities. The current consensus on operating income for the S & P 500 Index is $ 133 per share. According to the analysis of Trump's proposals in the Arora report, the tax cuts could yield about $ 13 to the S & P 500's earnings. Deregulation could add $ 7 more. If gross domestic product growth were to reach 4%, the S & P 500's earnings could reach $ 190 by the end of Trump's first term. Given the potential growth of the economy, despite the Federal Reserve's plan to raise interest rates, the price-earnings ratio (P / E) could remain in the range of 18 to 21. The price / earnings ratio of 20 applied was $ 190 S & P 500 translates into a profit of 3,800. (The benchmark is now around 2,351 people.) For the Dow Jones Industrial Average, this is stands at over 33,450 by the end of 2021, Trump 's first term. "
Investors should note that the US economy relies on about 70% of consumers. US consumer remains strong, as evidenced by earnings above Walmart's expectations
WMT, -0.03%,
Home Depot
HIGH DEFINITION, + 1.52%,
Lowe's
LOW, + 10.35%
and target
TGT + 20.43%.
What to do now
Start with Arora's third investment and trading law: Making investment and trading decisions based on probabilities is the only realistic and cost-effective approach.
If the trade war is successfully resolved and the resolution is not "soft", the probability is better than 70% of the chances that the stock market will reach 30,000 in the first term of Trump. However, the probability of a good resolution of the trade war, in our analysis of the Arora report, is only about 25%.
If the trade war is not resolved and that a Democrat other than Biden, such as Warren or Sanders, starts to take the lead, the odds are better than 50% of a decline in several thousand points of the Dow.
The situation is further complicated by the shenanigans of central banks and the downward trend in interest rates. I've already written "The US stock market is like a drunk evening: stay awhile, but know when to leave." This is the reason why investors should follow a proven adaptation model with successful experience in both bull and bear markets. . An example of such a model is the ZYX asset allocation model. Clearly, adaptive means a model that changes automatically with market conditions. Under current market conditions, static models that have already worked may not work now as market conditions have changed.
Disclosure: Subscribers to the Arora Report may hold positions in the securities mentioned in this article or at any time. Nigam Arora is an investor, engineer and nuclear physicist who founded two of the 500 fastest growing companies. He is the founder of The Arora Report, which publishes four letters of information. Nigam can be reached at the following address: [email protected].
[ad_2]
Source link