I have a heuristic (just observations on my part over the last sixty years) that an incoming president generally has little influence on the market for about twelve months after his oath of office. (e.g., Obama's real influence on the market was complete only by Jan 23rd, 2010 at around 10,800 for the DJIA (with it going up linearly from inaugural day 2009). As a heuristic it's reasonably useful as a gauge for how the market behaves absent the influence of the previous administration. I'm using the DJIA only because most non-financial people see it as being indicative of the broader market (S&P's better, but I don't have numbers easily memorized for that).
For Obama, this means the Obama rally saw an increase of 15,800 points (First anniversary for Trump was Dev 26, 2019, which meant that he "owned" the economy at 26,616). It was range bound within a window of about 1500 points either way for the next two years, breaking out only in Oct-Jan to reach a peak at 29551, then beginning to fall fairly steeply even before Covid really hit in February. The six-month-moving average for the DJIA today is just at 25,000, meaning that the DIA closed Friday almost exactly at the moving average, with no slope, which suggests that we're about to see an inflection point where the DJIA starts downwards again within the next week or so, ultimately hitting another inflection point around 21500 or so (based upon 6MMA) around Nov 1 before trending back upwards. That means that revisiting the March lows is certainly a possibility.
My personal suspicion is that we'll be around that level for a while. COVID-19's effects are going to take the wind out of the sales of the economy, and I think that another stimulus payment will be fought tooth and nail by the GOP unless they get a corresponding pound of flesh for their corporate donors, which I suspect Pelosi will block. My own belief is that the markets are still about 10% overvalued, given what I see with the virus, and so a DJIA 6MMA of 22,000 by November as not being unrealistic.
I'd be curious about your opinion about that?
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