by Ian Harvey
March 29, 2015
Goldilocks Out-Trumps Trump!
Despite the set-backs encountered by the Trump Administration the stock market keeps moving ahead. This became apparent with the GOP failure to reform healthcare legislation last Friday, and the subsequent pullback by the S&P 500 slightly below the resistance line of 2,325 on Monday (as discussed yesterday), and then the bounce experienced shortly after.
So the Goldilocks Effect, encompassing the economy, interest rates and earnings, which are all in good condition (and should remain that way for the remainder of the year), has managed to overcome the gridlock coming out of the Washington.
Therefore, the response from stock market participants becomes apparent with the focus pointed in a meaningful direction – the Goldilocks economy, not based on actions of the Trump administration – healthcare legislation, taxes, regulations, spending on infrastructure, etc...
However, all these factors increase the risk of emotional distraction from the sound strategies that a trader would have normally employed. A proven strategy that achieves its goals is very likely to be followed, but at times confidence can be undermined, which causes a “straying effect” – and then confusion sets-in, mistakes can be made and profits and/or capital can be lost.
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