This one chart shows why ‘the Trump trade is still intact’

Rich Ross, head of technical analysis at Evercore ISI, sees another rally for stocks ahead based on one key indicator in the charts.

On Wednesday, markets rose slightly after the S&P 500 on Tuesday posted its worst one-day slip since October. And looking forward, Ross says stocks are likely to continue their post-election run.

Examining the chart of the SPDR S&P 500 ETF (SPY), Ross observes that the ETF remains above its 50-day moving average. That metric, which averages together the prior 50 closes, sat at $232.61 on Wednesday — less than a dollar below the SPY's intraday low.

"We test and hold this key level of support," Ross observed Wednesday on CNBC's "Trading Nation." "It has defined support throughout the entirety of the postelection move, and will continue to do so."


The fact that the key ETF has not broken below its 50-day moving average indicates to Ross that "the Trump trade is still intact."

Should SPY fall below its moving average, Ross believes the ETF could pull back to its mid-December high of $228, which is about 3 percent below Wednesday's closing price.

Through Wednesday trading, the S&P is just 2 percent below its record high, and is up about 5 percent year to date.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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