Good morning, traders…
Jeff here.
When major catalysts cause shifts in market conditions, certain “trades” emerge…
But I’m not talking about individual stock trades — I’m referring to larger trends involving a specific basket of stocks and sectors.
For example, in 2020, when COVID-19 hit and everyone started quarantining … work-from-home stocks (such as Zoom, Peloton, and Docusign) went absolutely ballistic. “The Pandemic Trade” became a legitimate phenomenon in the stock market.
Similarly, in 2021, when GameStop Corp. (NYSE: GME) booked its historic, 800%+ short squeeze … any stock with high short interest (such as AMC and Blackberry) started squeezing to the moon. “The Meme Stock Trade” was the dominant theme of 2021.
And now, a brand-new “trade” is emerging…
Since Election Day, we’ve seen some parabolic moves in specific sectors — what I’m calling “The Trump Trade.”
What exactly is driving these swings? And more importantly, will these moves continue into 2025?
Before we get to the names I’m watching, I want to make one thing crystal clear: we’re not here to make political statements. As traders, we have one goal and one goal only — to make as much money as possible.
Whether you agree or disagree with Trump’s policies, the reality is that his return to The White House is set to shake things up in a big way.
And for options traders, that equals an enormous opportunity.
With that in mind, let’s look at the stocks and sectors primed for the biggest moves under a second Trump administration…
The Long Side of “The Trump Trade”
Crypto Stocks
Crypto stocks have been going haywire since the election because Trump has vowed to be the most pro-crypto President we’ve ever had.
He’s promised to:
- Fire crypto boogeyman (and SEC Chairman) Gary Gensler “on day one”…
- Create a strategic national crypto stockpile…
- Mine all Bitcoin in the United States…
- Lower interest rates further…
These moves could be massive for the entire crypto landscape — I think they could send Bitcoin to $100,000+ in relatively short order.
But an even more interesting setup is forming in the background…
While Bitcoin is currently in full-on price discovery mode at fresh all-time highs, crypto stocks haven’t even touched their 2021 peaks, which shows how much catch-up potential there is.
If Trump follows through on his crypto promises, I see a lot of upside for these names…
Stocks to Watch
- Marathon Digital Holdings Inc. (NASDAQ: MARA)
- Coinbase Global Inc. (NYSE: COIN)
- Riot Platforms Inc. (NASDAQ: RIOT)
- ProShares Bitcoin ETF (NYSEARCA: BITO)
Banks and Fintech Stocks
Trump has always supported the cutting down of red tape.
With Trump-driven deregulation, banks and fintech companies can operate with fewer restrictions, which could translate to bigger profits — and higher share prices.
Just look at the price action — we’re already seeing some serious post-election juice in banking stocks as the market anticipates these changes.
Stocks to Watch
- Block Inc. (NYSE: SQ)
- SoFi Technologies Inc. (NASDAQ: SOFI)
- Bank of America Corp. (NYSE: BAC)
- Financial Select Sector SPDR Fund (NYSEARCA: XLF)
- JPMorgan Chase & Co. (NYSE: JPM)
Cannabis Stocks
Former Governor of New Jersey Chris Christie, one of Trump’s close allies, recently predicted that Trump could federally declassify cannabis, effectively making it legal nationwide.
Trump hasn’t said this himself, but if this idea gains traction, the upside in cannabis stocks could be parabolic.
These stocks have been heavily beaten down for years, so any move toward federal de-scheduling could spark a violent rally to the upside.
Stocks to Watch
- AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS)
- Canopy Growth Corp. (NASDAQ: CGC)
- Curaleaf Holdings Inc. (OTC: CURLF)
- Cronos Group Inc. (NASDAQ: CRON)
- Turning Point Brands Inc. (NYSE: TPB)
Small Business Stocks
Small businesses have lagged behind the NASDAQ for years, but now they’re playing catch-up in a big way.
Trump is almost certain to help small businesses, so I think you have to be a bull on this sector for the foreseeable future…
Stocks to Watch
- iShares Russell 2000 ETF (NYSEARCA: IWM)
The Short Side of “The Trump Trade”
Gold Stocks
Gold and its related stocks — which have been absolutely blasting off during the Biden administration — might be in for some serious downside with Trump back in charge.
Gold has been surging because we’ve been in a highly inflationary environment, and market participants have been looking for ways to hedge against a devaluing U.S. dollar.
But with Trump appointing Elon Musk and Vivek Ramaswamy as co-chairs of a brand-new Department of Government Efficiency (DOGE), there’s a serious push to cut government spending and bring down inflation.
Elon has said he wants to cut $2 trillion of the federal government’s $6 trillion budget.
Less government spending means less need for inflation hedges like gold, which has already been sliding off its highs.
And I think there’s more red to come…
Stocks to Watch
- SPDR Gold Trust (NYSEARCA: GLD)
- VanEck Gold Miners ETF (NYSEARCA: GDX)
Solar and Green Energy Stocks
This one’s pretty straightforward: Trump has never been big on green energy and favors fossil fuels.
If Trump cuts government subsidies for solar and other renewables, it could weigh heavily on these stocks.
Biden’s policies have given green energy stocks a lot of support, but with Trump at the helm, that backing will likely disappear faster than Gary Gensler.
Stocks to Watch
- Sunrun Inc. (NASDAQ: RUN)
- Invesco Solar ETF (NYSEARCA: TAN)
- First Solar Inc. (NASDAQ: FSLR)
- Brookfield Renewable Partners LP (NYSE: BEP)
Chinese Stocks
Trump’s stance on China is as tough as ever, and I don’t see that softening anytime soon.
During his last term, a full-scale trade war hammered Chinese stocks, and this time could be similar.
Even if it doesn’t go as far as a trade war, Trump’s policies will probably create a tough environment for these companies.
Stocks to Watch
- Nio Inc. (NYSE: NIO)
- Alibaba Group Holding Ltd. (NYSE: BABA)
- JD.com Inc. (NASDAQ: JD)
- Bilibili Inc. (NASDAQ: BILI)
- PDD Holdings Inc. (NASDAQ: PDD)
Defense Stocks
This idea is more speculative and may take longer to materialize, but hear me out…
Trump has suggested he will end both of the foreign wars we’re currently involved in.
If that happens, we could see cuts to defense spending, which could weigh on stocks in this sector.
These stocks typically perform well with high government budgets. But with the new Department of Government Efficiency cutting costs — and a potential policy a shift away from big military operations — I think defense stocks will come well off their highs.
Stocks to Watch
- Rtx Corp. (NYSE: RTX)
- Lockheed Martin Corp. (NYSE: LMT)
- L3Harris Technologies Inc. (NYSE: LHX)
- Northrop Grumman Corp (NYSE: NOC)
There you have it, folks. These are the names I expect to see the biggest moves in over the next few months (and even the next four years).
But remember, there are no guarantees in the market. Don’t chase these setups without doing your own due diligence.
Happy trading,
Jeff Zananiri
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