The stock market spent the first half of January in a narrow range, but a mild surge the week after President Trump’s inauguration resulted in a net gain of almost 2% in the S&P 500 Index over its December close. That means the first prediction I made a month ago, “Trump’s inauguration on Jan. 20 will take place smack dab in the middle of year-end earnings reports from many important companies, so don’t be surprised if we see more volatility heading into those events”, did not materialize.

My second prediction for January, “We’ll also get a final accounting on holiday sales later this month, which could exaggerate the market’s movement in either direction”, was correct in its supposition but wrong about the outcome. Although holiday sales were weaker than expected, the damage from that was confined to only a small number of retailers instead of being viewed as “the canary in the coal mine” for the rest of the economy.

A year ago investors were quick to interpret any news as bad news, leading to a fast 10% correction during the first six weeks of 2016. But this year it seems bad news is now dismissed as irrelevant to the Trump narrative. Since bottoming out on November 4 the S&P 500 gained 9%, suggesting investors are focusing on the long term profit potential of Trump’s growth agenda instead of the empirical data reflecting current reality.

As short term traders, this presents an unusual profit opportunity: If enough people are temporarily ignoring conventional metrics when making buy and sell decisions, then we can make money from those decisions if we correctly identify stocks those investors are likely to embrace next. The good news is our Rapid Profits Matrix consists of 15 unique algorithms for identifying tradable stocks, so we can prioritize those that are most congruent with the current stock market mentality.

As for our overall portfolio performance last month, I only closed one trade in January – a moderate loss in Michael Kors – since the stock market wasn’t giving us much to work with. But I did open four new positions in January, plus one on February 1, to expand our portfolio to a total of 11 open positions which are updated on the pages that follow.

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