| | | | Sector Rotation Playbook: Where to Look for Opportunities in 2025
I have a new chart showing which major country's central bank is back to buying lots and lots of gold….
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Sector Rotation Playbook: Where to Look for Opportunities in 2025
As we approach year-end, we’re starting to see the classic signals of sector rotation — the market’s annual re-shuffling of winners and losers. This isn’t new, of course, but it does provide some interesting plays as we head into 2025. If you’ve been holding onto high-performing sectors, now is the time to evaluate where profits might be limited — and where lagging sectors might finally catch a bid.
The Big Picture
2024 has been a banner year for Big Tech and AI stocks. Companies like Nvidia (NVDA) and Amazon (AMZN) pushed their limits and led the charge, driving much of the overall market gain. But as the calendar flips, those leaders may start to cool off, making way for less glamorous — but potentially rewarding — sectors to take the stage.
Small Business and Financials Gaining Momentum
Take a look at the Russell 2000 for an example of where rotation might be gaining ground. Small business exposure in this index is getting a boost as we enter a new political cycle. And while Financials experienced a huge pop after the election, we could see more growth there as well — though we’ll likely get a pullback before the next leg up.
We’re also seeing a noticeable shift in policy expectations, with a Republican administration likely to favor traditional energy and small businesses. This could re-energize sectors tied to fossil fuels and certain industrials.
Financials, with their strong recent performance, might face temporary pressure but could present buying opportunities on the pullbacks. For example, banks and other financial institutions have shown resilience, but as we near the end of the year, they’re likely to experience the same consolidation many of the outperforming tech stocks are due for.
Renewable Energy and Infrastructure Could Take a Hit
Renewable energy and infrastructure stocks — darlings of the last few years — might see some downside with the potential policy shift. If traditional energy production becomes a focus, drill-baby-drill sentiment could take over, casting a shadow over renewables.
We’ve already observed some pullbacks in renewable plays, and I expect that trend to continue in the near term.
Sectors to Watch into 2025
It’s the underdogs of 2024 that may surprise us heading into next year. Many of the stocks that have underperformed could begin to show strength, while the high-fliers start to pull back. The key here is keeping an eye on those lagging sectors and identifying the best opportunities for when this rotation begins to pick up speed.
Historically, what’s been left behind in the last stretch of the year can often make a solid comeback in the next.
So, with a fresh wave of sector rotations on the horizon, the time to position yourself is now. Evaluate your high-flying plays — especially in tech — and start identifying potential opportunities in financials, small-cap stocks and select industrials.
We’ll cover each of these rotations closely in the coming weeks. Keep an eye out, stay nimble, and don’t be afraid to pivot as we watch for those new leaders to emerge.
Today’s Daily Chart Setup: Rollins Inc. (ROL)
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