Trump has trained stock market investors

President Trump may have trained stock market investors.

Although he appears to be unpredictable, some reactions to him in the stock market have become quite predictable. I’ll explain.

We know there is a tariff battle going on, and we can sense that companies don’t like it. Whenever the debate becomes heated and global tensions surface, the stock market reacts adversely as well.

The action in the stock market overnight after Thursday’s session was indicative of that. Futures for the Dow Jones Industrial Average DJIA, +0.11% were up 50 points and suddenly were down 100 points, a move of 150 points. The same move happened in the S&P 500 Index SPX, +0.10% and even the stronger Nasdaq 100 NDX, +0.59% gave up ground.

In fact, after almost every major negative tariff-related news in the recent past, the market has fallen, but then reversed itself, and sometimes sharply. In each case, “buying the news” made sense.

That is the lesson the stock market is learning from Donald Trump. The market is being trained to buy the initial negative reaction to tariff-related news.

Although Donald Trump himself may be very unpredictable, the stock market considers the tariff battle to be a provider of rather predictable opportunity instead.

History tells us that one day this will change, but so far the best play to take advantage of tariff news has been to buy the initial negative move in the market.

Thomas H. Kee Jr. is a former Morgan Stanley broker and founder of Stock Traders Daily.

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