In This Article:
The market (^DJI,^GSPC, ^IXIC) rallied after former President Donald Trump secured a second term in the White House. TPW Advisory founder Jay Pelosky joins Catalysts Hosts Seana Smith and Madison Mills to outline his view that the rally has more room to run. The strategist lists three positive indicators for the market: volatility subsiding, both in the bond and stock markets, seasonality, and investors who de-risked prior to the US presidential election reentering the market.
"Last week, the S&P [is] up about 4.5%. Bonds suffering a little bit. Dollar stronger. Commodities are a little weaker," Pelosky says, adding that the rally has further to run, citing "a couple of reasons."
The strategist explains, "You've had a collapse in volatility and importantly, not just volatility for stocks, the VIX (^VIX), but also the move index (^MOVE), which is the volatility index for treasuries, has collapsed back under 100 this morning from a high of 135 pre-election, [which] takes us back to levels that were in place pre the bond market pricing in a potential Trump victory back in early October." He adds, "If the move-in rates is going to subside for a while, I think that clears a roadblock for stocks."
Related Videos
Another indicator the market has room to run is seasonality. "You have seasonality, which is very supportive. You're in the best three months of the year for stocks."
With the collapse of VIX volatility, Pelosky says, "You have people who de-risked pre-election now have to come back in, and I think that's important because you're probably setting up for a chase into year-end."
The strategist says, "Technicals are supportive [for the rally to continue]. The one negative is that sentiment has gotten very positive very quickly. And that tends to be a warning signal. But from our perspective at TPW Advisory, we think the move for further upside, not a huge amount in the US, is there through year-end and then there's going to be probably a digestion period as people try to assess the likelihood of different policy measures coming out of the new administration."
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Naomi Buchanan.