Stock market question

amother

Pumpkin

Wed, Nov 09 2016, 3:10 pm

I have dabbled in the market for several years and follow it closely. There's something o don't understand. The market was down 9 consecutive days prior to the election on fears Trump might win. Also, whenever news hurting Clinton weighs come out the market would tank. When it was announced recently the the FBI wouldn't charge her the market rallied. This is my question: the futures were down over 800 points last night when it became apparent that Trump would win. This morning the market opened sharply lower although it had made back alot of its losses. As we near the close the market is up and having a substantial rally. How is it that we wrnt from Trump is the worst thing ever to we love Trump within a few hours?

Fox

Wed, Nov 09 2016, 3:24 pm

I can tell you what Ken Fisher of Fisher Investments says:

Their analysis shows that the market goes down for a period whenever a Democrat is elected. No real reason for this, but investors tend to assume that Democrats will be less friendly to business. Likewise, it often goes up for equally unfounded reasons when a Republican is elected.

However, the thing that the market hates more than anything is not knowing what to expect. In that way, a Trump presidency is the same as a Democratic presidency. The market doesn't know what to expect, so it will bounce around for a while.

FancyPansy

Sat, Nov 12 2016, 11:12 pm

I think because people were predicting the world was going to end if Trump won.
The people who trade futures were probably shorting all night expecting a crash.

The market didn't crash, and probably the shorts had to cover.

So how did we go from the worst to the best, who knows.

amother

Pumpkin

Sat, Nov 12 2016, 11:21 pm

LaurieT wrote:

But at the end of the day, more buyers than sellers will make the market go higher and more sellers than buyers will make the market go lower. I honestly think that in 99% (if not 100%) of articles I read in newspapers, online, interviews with hedge fund managers, investment gurus, everyone predicted that a Trump win would be a disaster for the market. With that in mind, who were the actual people buying on Wednesday morning the day after the election? And for the market to rally the way it did, it means that there was an overwhelming majority of buyers vs sellers Wednesday morning. Again, who were these buyers? It seemed every market participant stated how bad it would be if Trump surprised us and won. Who exactly was left to buy?

FancyPansy

Sun, Nov 13 2016, 12:41 am

That's a good question. Logically more buyers than sellers makes the market go up, and vice versa, but the market is manipulated in many ways.

The selling over the 9 days was slow and orderly, (probably) professionals selling.

If I look at a 5 minute chart for the past 10 days, the DOW, S&P, and NASDQ all gapped up on Nov. 7, hit a high point on Thursday and settled down on Friday. The same can be seen on a daily chart for the month. Things turned around on Monday the 7th.

In my opinion, which could be mistaken, the buyers were the same sellers coming back in.

Professionals sold until they knocked prices down to a point where they could afford to buy back in. On Monday and Tuesday they built up positions at the lower prices, on Wednesday with the uncertainty removed, everybody bought in, the shorts covered, and people who were sitting around waiting for results, came in and bought things as well.

We'll see what happens on Monday.