The pause that refreshes: Trump Rally stalls in Friday trade

Stocks remain inclined to take a breather in late week Wall Street action, as bears put on new shorts while Trump optimists sell to lock in substantial gains.

Image capture Jacquie Kubin @CommDigiNews

WASHINGTON, February 24, 2017 – After acting dazed and confused for much of this week, stocks looked wobbly during Thursday’s trading action, pointing toward a negative opening Friday; and a negative opening bell trade is exactly what U.S. markets got.

Stocks and major averages alike took a tumble in Friday morning trading action, with the Dow Jones Industrial Average (DJIA) dropping in excess of 45 points (-0.23 percent or thereabouts) as the broader-based S&P 500 and the tech-heavy NASDAQ falling by roughly the same percentage.

Read also: Trading Diary: Freaky Friday puts trading action on hold

Today’s noon-hour trading result is hardly an opening gambit for the epic crash some stalwart anti-Trump Rally bears have been looking for since November 9, 2016. Yes, it could build a bit early next week, and may very well do so for a time. But this YUGE Trump Rally—now very close to four months old save for an occasional interruption—clearly needs a breather if it’s to proceed very much further.

One of the culprits giving the willies to DJIA fans was this morning’s sharp pullback in the major banks, a direction that Thursday’s downward blip in this sector seemed to be predicting. Temporary though it may be, this nasty little reversal in the major financials could be one of two things:

  1. A much-needed temporary rest in the financials, which haven’t had this kind of run since before the onset of the Great Recession;
  2. A hint that “the boyz” know the Fed won’t jack up rates in March, meaning that rate recovery for most banks has been put off yet again because the Fed is seeing something in the economy that’s still not quite right; or
  3. Both of the above.

And yes, that’s actually three. My bad.

Opined Schwab VP of trading and derivatives Randy Frederick on CNBC,

“It does look like things have softened up a bit…. But I don’t see any major meltdown coming. The economic backdrop is still incredibly strong.”

Yep. Unless the Russians are really coming.

What’s really going on in the general market is most likely this: Wounded permabears are shorting again, absolutely knowing, for sure, that we’re going to really, really experience a market crash and very soon. At the same time, pro-Trump traders, investors and partiers are cashing in current months-long profits, the better to pile up that cash to deploy after the bears are finished battering stocks for a few days.

Even so, it’s clear that with so many bulls currently in the ring, traders and investors alike could get gored at any point in this ongoing game, although the overall market picture remains bullish for most market sectors.

Read also: CNBC/NBC/Survey Monkey tout fake Trump poll

Healthcare issues and the shares of pharmaceutical companies could get wobbly here and there, however, just about any time President Trump sends out an anti-Obamacare tweet or drills in on that issue publicly. In fact, that’s what he did just moments ago in his Friday morning address to CPAC’s audience of conservative True Believers during his appearance at that group’s annual confab on the Potomac, just outside DC’s boundaries in suburban Maryland.

We expect a negative, limp-wristed (can we say that?) market close Friday afternoon, with some kind of downside follow-through on Monday. Then, who knows?

The one thing about the stock market thus far under President Trump: it’s like the spinning game wheel in a carney sideshow. “Round and round and round she goes, and where she stops, nobody knows.” (Except for the insiders, that is.)

Have a good weekend. As for us, unless Monday’s trading action is a snoozer, we’ll be back at the beginning of the new business week.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17