Shorting Trump Has Not Worked – Let’s See If He Can Deliver

Posted 9:00 AM ET - Yesterday the market took a breather while it waits for the health care bill to pass. That vote will take place tonight and trading will be relatively quiet today. This is Trump's first major challenge and to this point the market has given him the benefit of the doubt. Although Republicans have stated otherwise, I don't believe this is the only chance for the bill to pass. This will be an iterative process and it could take time. Healthcare is something that impacts every American and Obamacare is imploding. Tax reform is the carrot that is being dangled in front of the House Freedom Caucus. It will not be addressed until a healthcare plan is passed. The Senate will have its say and this bill will get volleyed back and forth. The market has priced in corporate tax reform and the longer the healthcare plan takes the more impatient investors will grow. Trump's honeymoon is over and the election rally could be living on borrowed time. It's very possible that those gains will be erased and that the SPY will drift down to $230. If all goes perfectly and the bill passes through Congress (unlikely) stocks will be off to the races. Nothing ever goes smoothly in DC and we can expect a long drawn out process and plenty of grandstanding. In the meantime, interest rates continue to move higher. The Fed plans to hike two more times this year. Economic conditions are improving but not enough to shoulder aggressive tightening. The market needs a safety net (reduced corporate taxes, tax repatriation, reduced business regulations and fiscal spending). The next few weeks are very important. We will gain insight into the current political environment. If Republicans unite and the bill is passed, the market will rally. If this becomes a long drawn-out process and the bill is "watered-down", the market will pullback. Swing traders should wait on the sidelines. The market could go either way in the next two days. Day traders can use the first hour range as a guide. If we are trapped within it the entire day keep your size small and reduce your activity. If the market rallies above the first hour high, favor the long side. If it is below the first hour low, favor the downside. Support is at SPY $232.50 and resistance is at $235. We can expect rumors regarding the vote today and they have the potential to swing the market. Tread cautiously and let's hope that politicians can get something done. Anyone who has shorted Trump has lost. Let’s see if he can deliver. . .

Daily Bulletin Continues...