US is going higher - Momentum has taken over

The US is going higher. We cannot ignore what we are seeing: momentum has taken over. Trump’s speech  (where all you could hear was clapping & standing ovations all through it) will absolutely  kill  the  bears. They have been  talking about this speech being the “trigger”,  but it wasn’t and the other day in the  US a short basket rallied 3% (Vs mkt +0.1%) which indicated the US shorts have finally begun to panic – after pretty much holding their nerve all through February (where S&P 500 rallied +3.72% its best monthly rise in 11 months)


So we may see a  combination of US short covering & US instos continuing to buy + US retail buying + offshore buying (net TIC inflows) AND the one that has been the biggest supporter of US mkt in last 2 years: the US Buybacks  (by US companies) that are  all  now reactivated  (with reporting season in US over)…


So just to remind you that the  US rallied +3.7% in Feb with all the US buybacks – that have been the biggest buyer of US equities in the last 2 years – “inactive” … So with the  US Buybacks now joining back in …well it could easily see another leg up!


So you tell  me what is going to see a big US selloff – it needs to be “big factor” – not just a “I hate Trump" reason, or that the  US market is “overvalued” because  that just  doesn’t work.


You have to  understand we are now talking about “momentum”  and  one thing I have seen  over the  years – you  may even be the best trader,  fund manager,  broker  or  technical guru  in the world – but  when momentum is running, the markets don’t care what your charts or numbers tell you in the short term. It can  keep going for a lot longer than anyone realises.


The  CTA’s  (Commodity Trading Funds) who  buy the breakouts  & the  ETF’s don’t look  at  fundamentals – they just  trade the trend & momentum. So it doesn’t  mean we won’t get a decent  selloff – we all know it will come – but those  banking on it in the next month  may be in for a  rude  shock. Still, today was  meant to be an “Independence Day” event (think the movie) for the shorts where they caught the alien Trump out, but it seems Trump has not delivered the disaster  they have  all predicted, they  have all wanted, and that  they  have all positioned for.  They are  stuffed. He  really has thrown a spanner  into the works. He was meant to crumble by now and even though he has had a few notable setbacks – they are not in the areas that we all watch and care about – the US economy.


Ok another reason why I see the US moving higher was that when Trump put in his much hated and very controversial … 90 Day “Muslim ban” against 7 countries (that funnily enough had  actually been determined  by the  Obama  regime earlier) it was seen universally a  pretty shocking event for many Americans (and others across the globe).


That for me was a  really defining moment  for the “markets”. It was  going to hit US tourism, US flights, US relations  etc – it was deemed by the ‘media’ as horrific & disgusting – there were multiple “protests.” So that saw the first sign that the selloff was coming - the  US market fell for about 2 days by about 1%. BUT then – it did what no one expected - it rallied straight  back & as an extra slap in the face – went to a new record high!


That was  such a massive sign.


It  told us that the momentum for Trump and what he is going to do for the US is so great  they will  ignore  this event. If the  US was not going to sell off on this – then it needs  something “really BIG” to trigger a big selloff. Ok The  nongs out of Europe  may give us a  trigger – but all those who are  looking at Trump and saying he will cause it … well we  are still waiting and the US just keeps  on  going up. All  the  selloffs are mild and get bought every time.


Tomorrow I’ll highlight why you probably want to stay “long” the Aussie market (and make sure you buy it on the selloffs) over the next 2 months. It is an  interesting Aussie market stat  you really  need to be aware of, that I wanted to mention a month ago but with reporting season I had to can it. But I’ll try and have it ready for tomorrow.


I’ll also put in a really worrying stat  (for the bears)  that has been  triggered and indicates  the  US will continue its phenomenal run, and be higher in 3 months AND 6mths. It doesn’t get triggered very  often, but when it does, it has an  extraordinary success rate.


Extract from The Coppo Report. More detail about the report is available here: (VIEW LINK)


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Richard Coppleson
Director of Institutional Sales and Trading
Bell Potter

Richard authors “The Coppo Report”, a highly regarded market newsletter. He has over 30 years’ experience in financial markets, beginning his career at Ord Minnett where he worked for 15 years, before moving to Goldman Sachs.

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