What should we trade with Trump winning? Let Ichimoku answer it. No one excepted Trump to win at all so today everything is in a state of shock. Markets reacted one way last night and during the day, they reacted another way. What is real? What is fake movements? What is short term price action? What will be long term? These are some of the questions people are asking today after the “Black Swan” event from last night.
People have some idea on what Trump believes in but no one really know what actions will be placed behind his words. In order to see what market sectors will lead or lag when he takes office, we have to have a “reference point”. Without a reference point, we can’t really determine what really is going on without comparing it to something.
We are going to take the charts from yesterday before the election and assume that is the reference point. Today’s price action is going to be the “Trump affect”. The “Trump affect” really only matters if it breaks major support/resistances. If it doesn’t, they could be pull backs only and be “false”.
The charts shows us the action people are taking with their money. Let’s examine the main market sectors to see how they reacted to Trump winning.
In our monthly newsletter, we published the latest update for all the main sectors. Here is the table that was published November 1, 2016:
We are going to examine each individual sector now. All charts are provided by Thinkorswim from TDAmeritrade.
Below is the daily chart for $XLK. The technology sector is consolidating at the top of a bullish trend. The current support is 46.95 and resistance is 47.67. We opened below the support but now we are above it. As a result, the support is holding. No support/resistance has been broken for this sector.
Below is the daily chart for Industrial sector $XLI. We are in a bullish consolidation pattern before the election. Today, price broke the minor resistance and the major resistance at 59.33. As long as we close above 59.33, there was a major “Trump affect” for this sector.
Below is the daily chart for the financial sector ($XLF). Before the elections price was consolidating and held the support at 19.47 and went back to the top of the consolidation pattern before retesting the bottom again. This was a bullish signal before the elections. Today, price broke the resistance at 19.95, the top of the consolidation pattern. This sector definitely had a “Trump affect”.
Below is the weekly chart for the material sector $XLB. The daily showed a bullish break out but that really isn’t real. The Weekly charts show that price held the support at 46.90 before the election. Now price is at a major resistance at 48.17. We have to wait to see where this sector closes at the end of the week. Even if it breaks this resistance, it has many more to conquer to go”bullish”. Therefore, this sector didn’t have a “Trump affect”, it was short term (for now).
Below is the Weekly chart for the Telecom ETF $XTL. The chart is in a bullish trend holding major at 62.65. Today, price is trying to break the minor resistance at 64.93 but we have to wait to the end of the week to see where it closes. Once it breaks this resistance, it will have a high probability to retest the high and break it. This sector really didn’t have a “Trump affect” even thought it is breaking a resistance because it was bullish before the elections and the trend is just continuing.
Below is the Weekly chart for the Healthcare ETF $XLV. Before the elections it has been consolidating between 66.98 and 70.99. Today, we held the support and we went and held the resistance. Even with the big movement, we still haven’t broken any Support/resistance as of yet. We have to wait to end of the week but doesn’t really look like a “Trump affect” right now.
Below is the weekly chart for the Utilities ETF $XLU. Price is going through a bearish major pull back for the bullish trend. The resistance controlling the major pull back is 49.91 with a minor resistance at 49.01. One of the major pull back support is 46.92. After the elections, price is continuing it’s journey to the support. No real “Trump affect” yet.
Consumer Discretionary ($XLY)
Below is the Weekly chart for $XLY, the consumer discretionary ETF. Price is just consolidating before and now after the elections. Nothing to really talk about right now until we see where price closes at the end of the week.
Consumer Staples ($XLP)
Below is the weekly chart of the $XLP Consumer Staples ETF. Price before the elections was going through a pull back to the support of 51.70. Today, price held the support and also holding the resistance at 52.57 so real “Trump affect” at all.
Below is the weekly chart for the Energy ETF. Price has been consolidating between 67.79 and 71.15. Today, nothing really has changed so there is no “Trump affect”.
In summary, RIGHT NOW, Financials and Industrial ETF have the “Trump affect”. I said right now because this has to be a conitnously project that has to be done all the way to January. Today is only the first day to see what reacted. Now, we need follow through with these sectors. Others could be delayed and that is why we have to monitor them.
For example, Healthcare jumped up drastically this morning at market open. Price retreated a lot. MNK, TEVA, MYL< AKRX, PRGO, ENDP, HZNP, VRX were up drastically up before market open. Lot at them now and look at the weekly charts. A lot of them has false moves or stopped at major resistances.
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