The Dow Jones Industrial Average was the top-performing major index on the stock market following Donald Trump's resounding election victory. Key ally Elon Musk was rewarded, with Tesla shares popping. The likes of Nvidia, financial plays such as JPMorgan Chase and Trump Media & Technology were also strong.
The Dow Jones industrials soared more 1,500 points and closed at record heights Wednesday. Small caps did even better, with the Russell 2000 surging nearly 6%. Such bullish action means investors should now be looking to put their cash to work. A major overhang to stock market gains has been removed, and the S&P 500 and Nasdaq composite indexes are above key benchmarks.
What Investors Should Do Now
IBD Chief Market Strategist Mike Webster thinks the market setup looks ideal for those looking to put their money to work. And, given the encouraging signs, he thinks being aggressive makes sense.
"I think it looks picture-perfect. And I think the setup is great," he said on IBD Live Wednesday. "It doesn't mean it's going to work out, but you play the odds. (It's) like playing poker and you get two aces, you know, you go heavy."
Webster says he's "extremely bullish" at the moment due to the encouraging signs from the market. He believes investors should have their target exposure levels in mind and take that into account as they take action.
However he warned against investors putting all of their chips on the table at once. For example, if one is 10% exposed at the moment and your goal is getting to 80%, he said increasing exposure to the 40%-50% range is a more realistic aim for a single session and then the exposure can continue to be increased incrementally.
You can find IBD's recommended exposure level by clicking here.
S&P 500, Nasdaq Above Benchmarks As Dow Jones Hits Record
The much-watched Dow Jones index made a monumental move, surging nearly 1,500 points and closing with a gain of 3.6% Wednesday. It decisively broke a downtrend and is clear of its short-term and major moving averages.
The Nasdaq composite also surged, notching a closing lift of 3%. Following its rally it moved more than 3% above its 21-day exponential moving average.
The benchmark S&P 500 popped 2.5%. It recently tested its 50-day moving average but ended the session just shy of 4% above this key benchmark.
Meanwhile, small caps were the strongest performers. The Russell 2000 soared 5.8%. The iShares Russell 2000 ETF is in the buy zone above a flat base entry of 228.63.
Financials and industrials were among the best-performing S&P 500 sectors. But Treasury yields rose Wednesday, presumably on expectations of more deficit spending under a Trump Administration.
Elon Musk: Tesla Stock Clears Entry
One of the key allies who helped drive Donald Trump to victory is fellow billionaire businessman Elon Musk. Along with the privately-held SpaceX, he is also CEO of Tesla.
Tesla is extended past a 264.86 entry and just out of buy range from a higher alternative entry of 273.54.
The bullish move saw Tesla win a spot on the IBD Leaderboard Watchlist. All-around performance is solid, with its IBD Composite Rating sitting at 84 out of 99. It is up nearly 20% so far this year.
Tesla is one of the so-called Magnificent Seven stocks. Most of the other names within this elite group also shined Wednesday.
Nvidia was the next-best performer as it popped 4.1%. It is in buy range above a 140.76 buy point, according to MarketSurge analysis.
Another key event lies ahead for Nvidia this week, as it is set to replace Intel on the Dow Jones Industrial Average on Friday.
AI play Nvidia is a member proper of the prestigious IBD Leaderboard list of top stocks.
Google parent Alphabet rose 4% while Amazon.com popped 3.8%. Microsoft rose 2.1% while Apple slipped 0.3%.
Meta Platforms found support at the 50-day line as it close down 0.1%. In a March interview, Trump called the firm's Facebook platform "the enemy of the people." At the same time, he reiterated his opposition to a ban on TikTok.
Bank Stocks Gush Higher As Trump Removes This Overhang
One sector that was shining was finance. Wells Fargo analyst Mike Mayo said the Trump win could have a big impact on banks.
"[The] Trump win is a regulatory game changer that likely includes more free markets, less harsh oversight (aids capital, costs, fees), and reduces 'regulatory risk,' " he said in a note to clients.
He also said that this development should help "all banks" but especially the so-called Global Systemically Important Banks. This elite group includes the likes of JPMorgan Chase, Bank of America and HSBC. Mayo's favorite pick among these is Citigroup.
JPMorgan Chase gapped above a cup-base buy point of 225.48 amid a rally of 11.5%. This is a second-stage base, which still counts as early. Its latest pattern was formed in over six weeks, MarketSurge analysis shows.
Overall performance is solid, with JPM holding an IBD Composite Rating of 82 out of 99. Earnings performance is an Achilles' heel, with its EPS Rating coming in at 73 out of 99.
Bank of America stock surged 8.4%, HSBC fell 0.5% and Citigroup stock soared 8.4%, but closed off highs. Citi has cleared a 67.81 buy point and is sitting in a buy zone.
Pure Donald Trump Play Trump Media Pops
For the true Donald Trump supporter there are few stocks more alluring than Trump Media. The firm's main business is Truth Social, the social media platform Trump established after being booted off Twitter, now named X.
DJT stock has whipsawed wildly during 2024, waxing and waning along with the fortunes of its namesake.
After exploding out of the gates, DJT stock closed near the bottom of its daily range with a 5.9% lift. It ended the day more than 50% above its 50-day moving average and just above its 200-day line.
The company posted its quarterly report Tuesday. Its quarterly loss narrowed to 10 cents per share compared to the same quarter of last year's loss of 19 cents. Revenue fell 6% to $1 million.
The fact the company is losing money, its speculative nature and the fact it holds a poor IBD Composite Rating just 55 make this a stock to avoid, at least for now.
These Stocks Clear Entries Amid Breakout Bonanza
Meanwhile a number of stocks cleared buy points amid the ebullient action on the stock market Wednesday.
In total, more than 10 made it onto the MarketSurge breakout screen. Here are some names to ponder.
Payments stock Block, formerly Square, is in a buy zone above a cup-with-handle entry of 75.
Overall performance is strong, with its IBD Composite Rating sitting at 93. Earnings are seen rising 94% this year before popping a further 27% in 2025. Results are due Thursday.
Axos Financial is above a consolidation entry of 79.15. This is an early stage pattern, which is a bonus.
Axos has top fundamentals, with an EPS Rating coming in at 98 out of 99. It's also in the top 14% of all stocks in terms of price performance over the past 12 months.
Those with a tolerance for risk can consider IPO stock CeriBell. It tested an IPO base buy point of 27.71 and ended the session just above this level.
CeriBell's IPO price was 17 per share. The medical technology company provides a point-of-care platform that helps detect hidden seizures.
Please follow Michael Larkin on X at @IBD_MLarkin for more analysis of growth stocks.
