Will Trump Create A Stock Market Crash? The 1 Chart You Need To See

There is now only one crucial call to make in the stock market: What is the Trump Presidency going to do to the stock market?

I’m a Brit, so call this post-election interference if you will, but the answer to this question is now the key to profits or losses in the coming couple of years.

Like or loathe the Democrats, it’s hard to deny that they oversaw a buoyant U.S. stock market. It is ironic that the churls of the stock market – the very beneficiaries of the copious liquidity juicing asset values – have risen up and are about to upend the system responsible for the sort of valuations in the stock market and liquidity in the VC arena that made them Lords of Creation. As a Brit, though, I do irony.

However, that’s not the point. We should be stoic – change what we can and accept the rest. What we can change is our personal circumstances, and if we have a large proportion of our wealth in assets, we need to call what’s coming next – and it’s going to be BIG.

At this point, I could break down my theories, and we could go on a bumpy ride of speculation, but we need to face the fact that economics and markets are very hard to predict. Even Nobel laureates can be wrong on something as basic as inflation, while amateurs like myself can sometimes be spot on.

So let’s invoke the greatest market AI to help us divine the future – the hive mind that makes up the market. Let’s turn to the Nasdaq chart and listen to what it is telling us. It’s the driver of the whole enchilada.

To me, this chart is tremendously useful:

Right now, the market has formed a gnarly knot of volatility:

That means it doesn’t know whether to laugh or cry. Consequently, the market is deciding what to do next. Let’s keep it simple:

At this point, we can say, “Sure, that looks like a fork in the road we can live with. Let’s watch to see which route it takes.”

So this is how to do that:

This idea goes back so far it’s painful. The concept is that uncertainty creates volatility, which is bounded. When the range of volatility is breached, the market is on the move in that direction.

So you pick your red lines and watch the market decide. Then you jump on board.

This can be tricky in a random market, but this is no random market. Very non-random things are underway, and we know the outcome is going to be either heaven or hell. It’s Charon at 18,000 and the Pearly Gates at 21,000.

I agree with the market right now: who knows? The tension comes from trying to guess the outcome of chopping 20% of government spending out of the economy versus the execution of a group of really smart people doing the surgery.

To most of us, the words and actions of geniuses are often indistinguishable from those of madmen. The market will figure that out for us – and it shouldn’t take long.