The trading game has changed
Economic data and central banks don't matter right now
The trading game is always changing.
In general, the market focuses on economic data. Sometimes it's jobs, other times it's the consumer, inflation or growth. Another focus of the market is often central banks and interest rates.
At rare times another theme drives markets but this is one of those times. It's all about politics.
That's largely been the story since the US election but it's more true than ever right now. The market is watching every move out of the White House and trying to figure out what's going on. It's the same in Britain regard Brexit.
In the even bigger picture, the market is trying to figure what's going on with global populism and protectionism.
It's a tough theme to trade. There aren't many rules. I would say the overarching guide at the moment is confidence. In the immediate aftermath of the election it was hope and optimism that Republicans would cut taxes and regulation while boosting infrastructure spending.
Right now the market is trying to evaluate the general competence of Trump's administration. As we saw on Monday, the market doesn't like stumbles or anything bizarre.
Trump won the election but it's critical that he earns some respect from the people who didn't vote for him and the world in general. The bar isn't high. The market expects Trump to be Trump but as long as he focuses on policy and doesn't get distracted, that's good enough.
In the past two days, he's been a success. He held some meetings, signed some executive orders that fit with his agenda and aren't extreme. Today, the market is rewarding that with record highs in the S&P 500.
Still, it's tough to trade and it can evaporate in an instant.
A major helping hand is the technicals. At times the market ignores technicals but this isn't one of those times. Watch the charts closely. For the latest see our technical analysis page.