Trump’s victory made stocks bullish?

Trump’s victory didn’t change anything in the stock market. The stock market is still, as it has been seemingly forever, the mother of all financial bubbles. The fact that U.S. government bonds crashed in response to the election might have an explanation, but the stock market? The evidence that I have published in the last few weeks about the terrible fundamentals that are in the highest valued stocks, has not changed. It is still going to take a drop of about 50% in the S&P to get back to the historical average of earnings per share.

In my table of relative-strength stock market sectors, there is a divergence between the two groups of growth stocks, technology and cyclicals. The technology group sank by 0.56% while the cyclicals moved up by an amazing 1.56% The financial group (i.e., the bank, financials and insurance sectors) exploded higher by 5.5%! The market goes higher only when all groups are singing from the same song book. Once the market realizes, finally, that it cannot move higher, it will sink. But, like Sisyphus, the market is pushed up only to have it roll back down over and over again. This has been the story since the end of 2014.

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