The Trump Market Is Killing A Couple Of Popular Trading Strategies


The S&P 500 has been surprisingly stable following the shocking election of Donald Trump on Tuesday.

Despite the overall stability, Trump’s election has certainly had an impact on a number of traders. International stocks, hospital stocks, gun stocks and gold stocks have been hammered. Prison stocks, drug stocks and bank stocks have soared.

PreMarket Prep hosts Joel Elconin and Dennis Dick discussed the ways the Trump election has impacted traders on Friday morning’s show. Dick started out by talking about the difficulties statistical arbitrage traders have had this week.

“If you are doing stat/arb here in the last couple of days, you are getting run over. I have backed off on a lot of different stat/arb strategies because I realize they aren’t working right now in this Trump market,” Dick said.

Statistical arbitrage isn't the only popular strategy that is falling flat.

“I do a lot of mean reversion as well. That is not working either because these trends are very, very pesky,” Dick added.

He noted that his short on Bank of America Corp BAC, which spiked from $17 to $19 in two sessions this week, isn’t even working.

Sturm Ruger & Company Inc RGR is another mean reversion trade that has killed traders this week. After the stock plummeted 14.4 percent Wednesday, it dropped another 12 percent on Thursday and has barely bounced so far in early Friday trading.

Dick mentioned Facebook Inc FB and Procter & Gamble Co PG as two other mean regression trades that haven’t worked in the Trump market.

“When it’s straight down on the move like that, it’s tough to make money as a trader,” he concluded.

Elconin said that the best thing traders can do when one strategy isn’t working in the market is switch things up.

“When something’s not working, try and cut bait,” Elconin advised. “Also try and look at some new strategies… Eventually things are going to calm down.”

You can hear the entire discussion starting at 2:13 in the clip below. Listen to PreMarket Prep and chat LIVE with our hosts, guests, and other listeners every weekday morning from 8-9 a.m. ET!

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Posted In: PoliticsOpinionTrading IdeasGeneralDennis DickDonald TrumpJoel ElconinPreMarket Prep
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