The New Normal: Is The Current Bull Market Trump Resistant?

The markets have had a strange relationship with the new commander in chief.

Companies and sectors singled out by the president in official speeches or in Twitter Inc TWTR missives have seen palpable, if short-lived, spikes and valleys; businesses have voiced anxiety over President Donald Trump's stated immigration and trade policies; there is growing friction between the Executive and Judicial branches of government relating to Trump's executive order on immigration; and there are persistent rumors and leaks from within the Oval Office that have generated frequent headlines. Under normal circumstances, the average trader might expect the markets to be quite volatile in the current political climate.

However, that volatility has not really materialized. In fact, in the brief month since Trump took office, the Dow, S&P, and a swath of other indices have all hit record highs several time over and seem to show few signs of slowing.

Options trader and recurring guest on the program, Nic Chahine was on Tuesday's edition of Benzinga's PreMarket Prep morning show. Chahine discussed why, for the time being, traders may not need to worry about controversies coming from Washington.

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Nothing New

The persistence of the current bull market is evidence of Chahine's main point in relieving any possible anxiety traders may have over the news out of Washington. "It's going to take a new negative headline to drop us," he said, "something we haven't been expecting, and that can happen at any time on any day. That is not a reason to short."

He also emphasized that, since that the headlines have not broken the rally yet, traders should just focus on actionable news. "It's harder to short the market than to short specific stories."

Waiting For The Big One

Chahine's appearance on the program coincided with the resignation of former National Security Adviser Michael Flynn over false statements he made regarding a conversation with the Russian ambassador to the U.S. during the 2016 election campaign.

But Chahine emphasized that, based on the sustained growth over the past few months, it will take something more dramatic to affect the trend. "We knew the Trump White House was going to be controversial since he started running. It's not a new headline. Something new like some wheel falling off somewhere else in the world, or finding out something new, or someone challenging the Trump presidency, or something like that, something that we have not seen yet, that could probably cause a tizzy."

He continued by even hedging whether even a bombshell development from the administration could derail the current momentum. "We've had a couple [of headlines] we thought were going to be tizzies and they weren't, they were like for 20 minutes than boom off to new highs."

Frisky Biotechs

Pointing to biotechs as an example, Chahine explained out how the sector has defied the news coming from the White House. "They've been beaten down or held down by headlines, or the threat of headlines. But technically, they are starting to look frisky. And fundamentally, they actually make money."

Chahine elaborated on how he believes the attention-grabbing soundbites from the president and his surrogates have overshadowed the potential of otherwise sound sectors. "Some of them have streams of income that are not being recognized for value purposes the way they would be under normal circumstances because of the threat of the Trump tweet or whatever. But like I said, these are headlines we have seen before. So what, he's going to say we are going to push down more on prices, but he's said that like three or four times, and every time it has had an effect on it. But at some point, it will stop having an effect, until we see action."

That action, and their consequences, are still playing out. In the meantime, Chahine's main message to bearish investors was, "It's harder to short the market than to short specific stories."

Tune in at the 34:20 mark to listen to the full interview with Nic Chahine in the track below.

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8–9 ET here, or catch the podcast here.