Thoughts on Stock Market - Feb 18 2019

2019 has started with a bang with S&P, Nasdaq, and DJIA also returning double digits year-to-date.  Where the market will go from here. 

1. Imminent geopolitical event is the trade talk.  If indeed a trade deal is reached by March 1, then the market will continue rising another 10% easily.  If Trump and Xi cannot reach the deal, it will not be the end of the market climb, but it might be filled with see-saw sessions till Oct/Nov time when Fed decides to only raise the rate once
2. Feb fund rate.  Currently the fund rate is 2.5%.  Supposedly the Street expects Fed to raise the fund rate three times.  Then Powell came out and became a dove in December amid the worst month in history.  So now everyone expects two hikes.  If the tone is changed again, which is unlikely, then the market will start turbulence again.
3. Other than these two macro events, the market will be driven by sector rotation as evidenced recently in consumer products outperforming FAANG stocks.  Starbucks and Nike have higher YTD return than Amazon and Twitter, partially due to the Street's optimism on the trade deal

So what to do now. 

1. Don't bet against the market.  Clearly the market has established the uptrend again.  UXVY needs to go. 
2. Load up Nike and SBUX now in preparation for the trade deal.  Even the trade deal did not happen or was not as advertised, the market will regroup and go from there.  Why, the downside of a non-deal has been factored in the prices already during the market dive between Oct and Dec last year
3. Netflex or not.  It is a hard call.  Disney is not a real threat due to its positioning.  The price hike effect will show up in its next earning report and also this year.  So it does not hurt to buy a few hundred.
4. How much cash to set aside?  It looks like that 2019 will have better return than 2018 and there is no other real threat in sight.  Need to be aggressive this year.  Buy on dips and hold on to the gains.