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The markets responded enthusiastically to Donald Trump’s decisive re-election victory, granting him a clear mandate in the Senate, with the House outcome still pending. This shift in power has brought both celebration and caution as investors recalibrate expectations for the financial landscape. Our pre-market analysis explores these shifts, focusing on top investment opportunities through the lens of StoryTrading’s four pillars: Catalysts, Sentiment, Fundamentals, and Technicals.

Macro Overview

Trump’s victory has sparked significant sectoral gains, most notably within IWM (Russell 2000), which surged +5.6% to a new all-time high. SPY and QQQ followed with gains of around 2%, while bond yields climbed sharply. This yield spike likely reflects anticipations of reinforced fiscal policies, a hallmark of Trump’s approach. For investors, this shift calls for strategic rebalancing, as new opportunities arise alongside potential vulnerabilities across sectors.

Key Index Moves:

• IWM: +5.6% (new all-time high)
• SPY: +2%
• QQQ: +2%

Rising bond yields have introduced volatility across sectors that typically benefit from low-rate environments, particularly in tech and high-growth stocks. On the other hand, financials, energy, and defense sectors have seen renewed investor interest. Notably, SOFI climbed around 7%. However, with bond vigilantes adding pressure to the markets, caution is warranted, particularly in interest-sensitive sectors.

Top Picks of the Day

This election event has unearthed both high-profile opportunities and emerging plays that stand to benefit from the political shift. Below are the day’s top investment ideas.

 AMZN – Amazon

• Catalysts: Jeff Bezos’ recent decision to oppose a Washington Post endorsement of Kamala Harris has cast Amazon in a favorable light under a Trump administration, a rare alignment that could temper regulatory challenges.
• Sentiment: While Bezos’ stock sales at $200 have presented some headwinds, investor sentiment remains optimistic, bolstered by Trump’s perceived support for the company.
• Fundamentals: Amazon’s core business remains resilient, and if regulatory pressures ease under Trump, this could unlock additional growth and operational stability.
• Technicals: Amazon is facing key resistance around $200 due to Bezos’ ongoing share sales, yet breaking through could see it reach our short-term target of $205. Momentum is building, suggesting a potential breakout.

 DXYZ – Direxion Daily Space and Defense ETF

• Catalysts: Trump’s endorsement of Elon Musk’s ventures in space and Starlink signifies possible federal support for space technology. This is a unique ETF option for investors seeking exposure to SpaceX and Starlink’s growth.
• Sentiment: Enthusiasm around Musk’s enterprises has significantly lifted DXYZ’s profile, positioning it as a primary vehicle for investors eager to capitalize on government-backed space initiatives.
• Fundamentals: The ETF’s complex holdings are underpinned by SpaceX’s valuation growth and anticipated contracts, adding stability and strategic value.
• Technicals: DXYZ has shown substantial volatility, with firm support at $13.50. This could provide a stable base, with potential upside in the $16-$18 range over the short term.

 TSLA – Tesla

• Catalysts: Elon Musk’s alignment with Trump has Tesla poised to benefit from policies likely to favor Musk’s ventures indirectly, especially those based in the U.S.
• Sentiment: Investor enthusiasm for Tesla has remained strong, bolstered by a broader belief in Musk’s strategic foresight and Tesla’s role in the EV market.
• Fundamentals: Tesla’s valuation is well-supported by its financial performance and growth prospects, particularly as U.S.-based manufacturing sees renewed focus.
• Technicals: With targets set at $270-$300, Tesla is positioned as a long-term growth opportunity. For shorter-term investors, the $278 support level offers an attractive entry point, with buy-the-dip opportunities likely.

 INTC – Intel

• Catalysts: Trump’s push for domestic semiconductor manufacturing has Intel in the spotlight as a likely beneficiary of government incentives aimed at reducing reliance on foreign chipmakers.
• Sentiment: With investors increasingly supportive of domestic manufacturing, Intel’s profile has strengthened as a key U.S. player in this strategic sector.
• Fundamentals: Intel’s earnings and strategic advantages in semiconductor production have made it an attractive contender for investors focusing on U.S. manufacturing resurgence.
• Technicals: Intel’s next resistance lies around $24.66; a break beyond this level could pave the way for a robust rally as more investors pile in.

Additional Picks to Watch

Beyond our top five, several additional stocks have shown promise given the current market environment and Trump’s re-election.

GEO – GEO Group

• Catalysts: GEO’s business model, tied to immigration and border security, stands to benefit from Trump’s approach to border policies.
• Sentiment: Positive investor sentiment aligns with expectations of expanded government contracts for detention and border security.
• Technicals: GEO faces resistance near $18.70, adding a layer of volatility to this swing trade. However, strong catalysts position it well for potential upside.

GFS – GlobalFoundries

• Catalysts: As a domestic chipmaker, GlobalFoundries is well-placed to benefit from anticipated U.S. government support to boost domestic semiconductor production.
• Sentiment: Following positive earnings, sentiment remains strong, though geopolitical factors will be essential to monitor.
• Technicals: The stock is stabilizing, making it a viable option for those interested in a semiconductor play with a U.S. production angle.

LMT – Lockheed Martin

• Catalysts: Lockheed’s stability is likely under Trump’s peace-through-strength policy, even as military budgets remain robust.
• Sentiment: Investor sentiment is largely positive but may fluctuate based on unfolding geopolitical events.
• Technicals: LMT remains a stable long-term holding, with potential support at current levels.

Closing Thoughts

The election results have ushered in a fast-paced and complex trading environment. Trump’s domestic policy initiatives are anticipated to benefit select sectors such as defense, U.S.-based manufacturing, space technology, and border security. This creates both immediate opportunities and potential long-term shifts in market dynamics. Our analysis, grounded in Catalysts, Sentiment, Fundamentals, and Technicals, identifies key plays in this evolving landscape.

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