An analyst has compared the performance of the stock market under US President Trump to that during Ronald Reagan’s term and now fears that investors will have to face a fierce bear market.
Both Donald Trump and ex-President Ronald Reagan did not come from the political establishment when they were elected to the White House. For Ralph Acampora, Director of the technical analysis department at Altaira Capital Partners, this was the occasion to look for other similarities.
Bear market under Reagan
When Reagan was sworn in on January 20, 1981, the Dow Jones index stood at around 950 points. At first, investors could look forward to a six-month “honeymoon” period, with a gain of just under 10 percent, according to Acampora.
But from the middle of the year in 1981 it went downhill. The US leading index ended the year with a loss of 9 percent. As Acampora explained to US broadcaster CNBC, many new US presidents are embarking on a bear market after the “honeymoon” phase – that’s the time they need to make the initial changes. “Most presidents face difficulties in their second year in office, and Ronald Reagan was no exception,” said the long-term market observer.
According to a generally accepted definition, a loss of at least 20 percent from the 52-week high is called a bear market. Under Reagan, the Dow Jones temporarily lost up to 24 percent. So had been reached on 12 August 1982 with 776.92 meters a low.
Trump bear market could get worse
As Ralph Acampora went on to explain, since the election of Donald Trump in November 2016 to January 2018, the Dow Jones has gained 45 percent and the S & P 500 index 34 percent. “That’s an impressive 15 months”. And although a correction began in February of this year, the analyst still sees the Trump stock market in the “honeymoon” phase.
But the future looks at Acampora with concern. For example, technical indicators of the Dow Theory, a common form of technical analysis, suggest that US stocks face a fierce bear market during Trump’s second year in office – and that could be even worse than the 24% loss under Ronald Reagan.