All major indexes are now trading above their 50 day-moving-average (dma). The S&P 500 has been up 9 days in a row, its longest winning streak in over 20 years. It’s about to cross above its 200dma.
Let’s revisit a chart I posted on 3/22/2025, at that time, negative investor sentiment had spiked to nearly 60 and the S&P 500 was holding above its 200dma. I saw the turmoil as political theater, needlessly creating self-inflicted chaos. I was hopeful the S&P 500 would remain above its 200dma, because the USA economy remains strong and resilient. It didn’t. Following the 4/2/2025 announcement of tariff reciprocity, suddenly the Media forgot about the nuance of “the art of the deal”. Negative investor sentiment spiked even higher, as the Media resurrected Smoot-Hawley depression era fears. The correction became an official “bear market” as the S&P 500 declined 20% from its February record high.
Since the 4/7/2025 intraday low, the S&P 500 has rebounded over 17%, yet negative investor sentiment remains high…much as it did during the early days of the Pandemic, even after the S&P 500 had risen above its 200dma. (see chart)
As I’ve stated many times, current market conditions are solely determined by one thing- what comes out of President Trump’s mouth. “Did I say that? I can’t believe I said that. Next question.” [ episode 466 still makes me laugh ] Whether his comments are genius game theory strategy or narcissism is irrelevant. The fact is that his comments move the market, but only short term (up or down). Don’t be distracted by the noise…his or the Media rebuttal.
The USA economy is going through a generational restructuring. The era of Peace Dividend, Post Soviet Collapse, Free Global Trade is over. We’re back in a Cold War, this time it’s less about nuclear weapons and more about trade. We’re in an Economic War. [ episode 468 ]
Over the coming weeks and months, watch for positive economic policy:
- Tariff clarity
- Fed interest rate cut
- Budget & Tax resolution
- Positive impact of deregulation
As for me and my money, I remain cynically optimistic.
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