Here's My 3‑Part Game Plan as Markets Pause and 'Trump Trade' Evolves
The market is catching its breath, as investors digest all-time highs and consider a barrage of moves from Washington. This is my trading approach.
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After a hot start to the new year, the market hit a wall on Wednesday with an intraday reversal and a soft close. The move was on lighter volume, but the message was clear: there is hesitation to keep chasing the S&P 500 and the Dow at these all-time highs.
We’re seeing elevated headline noise right now. President Trump’s signals on defense spending, oil, and corporate housing buyers created some churn, but the real issue is that after the chaotic trading we saw through the end of the year, the market just needs a rest.
Policy Churn and Sector Shifts
The "Trump trade" is evolving. The signal that defense spending could jump by $500 billion is already being priced in, giving a nice lift to defense names and tech-heavy plays such as Palantir (PLTR) and Ondas Holdings (ONDS) .
On the flip side, headlines about corporate housing buyers and general policy shifts are creating enough uncertainty to keep the broader market in check.
Waiting on Macro Signals
The focus is now shifting away from year-end tax maneuvers and toward the macro data. The December jobs report on Friday is the big one. Currently, the market isn’t looking for a Fed cut in January, but a weak report could change that math quickly. If the odds of a cut start to ramp up, it’ll likely give the bulls the fuel they need to overcome this current stall.
My Game Plan
Despite the grumbling from bears about high valuations and overextended charts, I don't see any reason to believe a major top is forming. This looks like a standard reset as we move into fourth-quarter earnings and a new policy environment.
My approach here is to stay disciplined:
- Manage positions tightly: I’m being very stubborn about protecting the good gains we’ve seen recently.
- Tactical trimming: I cut back some exposure on Wednesday but I’m not hitting the panic button; I actually added to a few of my favorite names on the dip.
- Patience on new buys: I’m hunting for new candidates, but most of what I’m watching needs more chart development before I’m comfortable ramping up position size.
We have a soft open on the way Thursday morning. Bitcoin and metals are a bit lower, and rates are ticking up, but don't let the intraday noise shake you out of good positions. Stay patient and let the charts develop.
At the time of publication, Rev Shark was long ONDS.
