This chart proves the existence of a Trump ‘put’ in the stock market

The president has impeccable timing in propping up the market when it falls. Read More...

Think what you may of President Trump, but there is an undeniable fact.

If you watch the stock market as closely as I do, you would notice that Trump often has impeccable timing to prop up the market. The timing of his latest announcement hit the bull’s eye. How so? Let’s explore the issue with the help of a chart.

Chart

Please click here for an annotated chart of S&P 500 ETF SPY, +1.11% Similar conclusions can be drawn from a chart of the Dow Jones Industrial Average DJIA, +0.95% Please note the following:

• The chart shows the stock market was falling.

• The VUD indicator, the most sensitive gauge of supply and demand in real time, was orange, as shown on the chart, indicating the supply of stocks exceeded demand.

• The setup was near perfect for the stock market to have kept declining.

• Trump perfectly timed the announcement of a delay in tariffs on cars and car parts.

• As the chart shows, a sharp rally ensued.

• Even the stock of Apple AAPL, -0.22% rallied. Apple presents a significant China-related risk.

• Semiconductor stocks that also represent China risk, such as Intel INTC, -0.20% AMD AMD, +1.27% and Micron Technology MU, -3.02% also rallied.

• Popular stocks that do not have material exposure to China, such as Alphabet GOOG, +1.35% GOOGL, +1.22% Amazon AMZN, +1.76% and Facebook FB, +0.24% staged stronger rallies.

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The Trump ‘put’

The prevailing wisdom is that there is a Trump “put” under the market. In plain English, that means there is a belief that the market won’t significantly drop because Trump always props it up.

For the most part, that belief has proven to be correct. But there are exceptions. Does anyone remember December 2018? Investors ought to take the Trump put with a grain of salt.

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at [email protected].