Stocks May Be “Melting Up” – but We Can’t Get Careless

After Americans elected Donald Trump president for a second time last week, with little of the chaos many expected, stocks “melted up.”

The small-cap Russell 2000 led the way, soaring 8.6% higher. Meanwhile, the S&P 500 and Dow Jones Industrial Average both gained 4.6%, and the tech-heavy Nasdaq Composite jumped 5.7%.

There were three catalysts here.

First, like we said, was the presidential election. The Republicans have secured control of the Senate and the House. Combine that with Trump’s substantial margin in both the Electoral College and popular vote, and that creates a pretty compelling mandate to govern.

In other words, we can expect Trump to make pro-business reforms and initiatives to stimulate economic growth priorities – and that has Wall Street and Main Street excited.

In fact, InvestorPlace CEO Brian Hunt recently made a compelling case for why stocks should do terrific in a new Trump administration. Whether you love Trump or hate him, Brian argues that you may as well settle in and prepare for the gains to come. (You can read Brian’s essay in full here.)

The second catalyst is the Federal Reserve. Last Thursday, November 7, the Fed unanimously decided to cut key interest rates by 0.25%. While the Fed hinted that it may have to start curtailing key interest rate cuts in its official policy statement, Fed Chair Jerome Powell also noted that Fed policy was “still restrictive.” So, if the Fed wants to move to a “neutral” level, that implies it will cut rates at least one more time. Whether that comes in December or in 2025, we’ll simply just have to see what the next inflation and jobs reports reveal.

The third catalyst is an early “January effect.”

Today, let’s “drill down” on that third catalyst. We’ll discuss what exactly an early January effect is… and why I expect stocks to head even higher in the near term.

But… not all stocks are going to head higher. We can’t become complacent and start throwing darts at a board.

So, I’ll also reveal which stocks should emerge as the market leaders… and tell you more about the system I use that helps me find them.