If you were trading on November 6, 2024, it’s a day you’ll likely remember with a bit of nostalgia. We saw significant shifts across various asset classes.

With Trump now elected and the first major market reaction behind us, let’s focus on identifying potential trades for the next 2-3 months.

Let’s begin by reviewing the industry movements from that day:

Yes, Banks +10% on the day vs Solar -10%. No need to say that my lotto trade on Solar did not do well. From +100% winner to -50%. That was a lotto ticket, meaning it was a very small size (OTM call spreads) and it allowed me to come light into the event.

When volatility spikes, there is some P&L to do in active trading. That was the case on that day and it offered for me great opportunities. I made 100x what I spent on those lotto tickets.

Now let’s look at how the sectors did on the day:

And now, this is where we are lucky to have a Discord community as one of our members spotted the obvious: Compare those returns with 2016.

As you can see here, there are some serious similarities:

As you can see, performances yesterday were pretty much the copycat of 2016 performances with some adjustments (XLV for example).

Now enough of the back trading and look and what could happen next, taking the moves that were made after the 2016 Elections Results.

Yes, looking at how the different sectors did after Trump Victory might be a good start. Financials and Russell 2000 did very well in 2016.

But we can do more than the ETFs level and we can drill down even more and look at single names.

To do so, I used Goldman Sachs Republican Pair Index that represents an equal notional pair trade of going long GS24REPL (GS24 Rep Pol Outperform) and short GS24REPS (GS24 Rep Pol Undrperform) and I compared that with the Goldman Sachs Democratic Pair Index GSP24DEM.

That is the ytd performance with a 26% difference.

But the big move was yesterday with the Republican Index up +10.73% and the Democratic Index down -10.07%

Going forward we should be interested in the different constituents of those indexes and where the outperformance could come from.

Below is a screenshot of a spreadsheet that I shared on Discord with the most advanced members:

From ETFs levels to stock levels, there will be many trading opportunities.

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I hope it helps,

Greg

greg@duponttrading.com