Tech Is Toast – Buy This Group Instead By Lucas Downey, Contributing Editor, TradeSmith Daily Friday’s market meltdown is a reminder that no matter how strong a trend may seem, stocks will always zig and zag. While many talking heads are busy questioning the new Trump administration’s cabinet picks, don’t lose track of the big opportunity ahead. As I highlighted recently, stocks are still a screaming buy after the Trump victory. You just need to zero in on the areas that’ll thrive in the Trump 2.0 regime. Today, we’ll dissect the latest market gyrations… and unpack the few select areas poised to outperform in the months ahead. Then we’ll take it a step further and isolate one cyclical asset class that’s set up for a big win. And as always, we’ll prove that call with data… and an impactful signal study that’s pointing to big gains ahead for this particular theme. Cyclical Sectors Are Outperforming Since the Nov. 5 vote, the S&P 500 is up 1.52%. Not bad. But under the surface reveals a few sectors shining even brighter. Below notes how Industrials, Consumer Discretionary, and Financials are easily outperforming to the tune of 2.11%, 5.13%, and 6.75%, respectively: 
Much of this sector outperformance is due to the pro-growth focus from the Republican Party. With the economy projected to heat up, it’s no wonder industrials, financials, and discretionary stocks are thriving. Those three areas track economic growth. When consumers are gaining ground, people build more, take out more loans, and buy more goods... all stimulating the economy. Additionally, during these climates, technology shares can take a backseat. After all, tech leads when growth is poor or there are concerns of a slowdown. The S&P 500 can struggle in times like this, since Technology makes up nearly a third of the basket. So if you’re looking to turbocharge the cyclical play, you have to look outside of mega-caps… And into the place we’ve been telling you to buy for the last few months. Trump 2.0 Benefits Mid-Cap Stocks Sector makeup is important for investors to understand. If we sum up the three cyclical areas thriving in the S&P 500, Financials, Discretionary, and Industrials account for just 32.5% of the basket. However, the S&P MidCap 400 takes that allocation to a whopping 53.8%. Also note how Tech is 32% of the S&P 500 while just 9.6% for mid-caps. Without question, mid-caps are the superior way to play the Trump 2.0 trade: 
And it’s not like we’ve been silent about mid-caps here at TradeSmith Daily. We’ve favored dropping down on the market cap scale since summer. And more recently, we showed how November is a seasonally strong period for mid-cap stocks. But we’re not stopping here. Because one power-thrust signal is projecting big gains ahead in mid-caps… Mammoth Mid-Cap Thrust Days Ignite Ferocious Rallies The day after the presidential election vote, a powerful rotation began. Last week, we highlighted how small caps saw a bazooka-style rally, and how that’s a good omen for the group going forward. In a similar vein, mid-caps were also part of the shakeup. On Nov. 6, the S&P MidCap 400 jumped 4.15%. For reference, that’s the single largest daily jump in nearly two years. To grasp how violent the up move was, below is a chart of the SPDR S&P MidCap 400 ETF Trust (MDY), which tracks the mid-cap S&P 400: 
That rip caught my attention, so I did some investigating. There’ve been 54 prior instances of a 4%-plus rally for the S&P MidCap 400 going back to 1991. That’s an ultra-rare event – happening less than two times each year. Here’s why it’s important… and why 2025 can be a strong year for the group. When the S&P MidCap 400 gains 4%-plus in a day, here’s what happens next: - Six months later, mid-caps jump 13.4%
- 12 months after, they climb 34.4%
- Out to 24 months, mid-caps thrust 54.2%
Using history as a road map, the post-vote mid-cap rally could be igniting a crowd-stunning performance in 2025 and beyond. If you ask me, that’s worth playing for. And it’s a reminder to cast a wide net in your research journey… isolating specific stocks that will benefit in the Trump 2.0 regime. Select financial, industrial, and discretionary tickers are dominating now. I believe 2025 will be a big year for many under-the-radar mid-cap equities in these sectors. Regards, Lucas Downey
Contributing Editor, TradeSmith Daily Note from Ashley Cassell, Managing Editor, TradeSmith Daily: For you options traders out there, you should know that the new zero days to expiration (0DTE) market has really taken off. Within two years, zero-day options have gotten to around $1 trillion a day in trading volume, according to JPMorgan Chase. And when we start seeing a lot of money flow into a specific corner of the market – that really piques our interest. Because these areas tend to be where you find the most dramatic gains. For example, in the research Jonathan Rose is preparing for his upcoming presentation, he’ll show you how you could’ve used these trades to TRIPLE your money from Donald Trump’s election victory… in less than seven hours. When it comes to options, Jonathan is our resident master of money flows. His 25-plus-year career trajectory, from floor trader to CBOE market maker to trading mentor, is a testament to the power of understanding these flows – including winners of 126%, 245%, even 463% or more, often in 30 days or less. So, there’s no one I’d rather have you hear from when it comes to the exploding market for zero-day options. Starting Saturday, Nov. 23, Jonathan will host his urgent summit on this brand-new money-making strategy. And the summit is completely free to attend. Just click here now to reserve your spot. | 
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