Now that the Federal Reserve (Fed) has raised interest rates for a second time in a decade, many investors are wondering whether such a move could jeopardize the impressive stock market rally that has been growing since Donald Trump has been elected POTUS on November 8, 2016. Chair Janet Yellen described Fed’s decision as a “vote of confidence” in the economy, meaning that the rate hikes were based on strong positive macroeconomic indicators.
That’s why, according to most of the financial analysts, one should rather bet on the continuation of the current rally rather than attempting to seek any contrarian divergence that may appear on the charts – there’s apparently one on the daily chart of the DJIA. Therefore and more than ever, “the trend is your friend,” Wall Street people told Cyceon. As long as there is nothing new that could potentially question the current trend, investors should likely remain bullish.
According to Cyceon, the addition of the Christmas plus Trump effects have given the trend big stamina; that’s why a bearish reversal should be confirmed twice at least to be a valid signal. The two rate hikes this year and the three additional ones to come in 2017 have been taken as further evidence that the economic situation is good… in the United States. However, optimism seems not as high as regards other regions like emerging markets which could suffer from a more expensive dollar.