As the presidency of Donald Trump is going to begin for the 47th time in the United States on January 20, 2025, strategists at Evercore ISI have painted a very thought-provoking picture of how the markets may look under his presidency. From stock trading that will blow minds to a change in options and crypto trading, traders are in for a wild ride. Let’s delve further into Evercore’s key projections and ways they might shape trading strategies this year, 2025.

A Three-Peat for the S&P 500?

Evercore sees the S&P 500 defying gravity for a third straight year of 20%+ returns. What’s the driver? The unrelenting advance of artificial intelligence (AI).

A key lesson here for stock traders is that this underlines the idea that riding the wave of transformative technology is often a less risky bet than fearing elevated valuations. AI-linked sectors, from chipmakers to software developers, remain hot tickets. Options traders might want to consider strategies such as long calls on tech-heavy ETFs to capitalize on sustained bullish momentum.

Stabilized EPS Estimates – A Breath of Fresh Air

Contrary to widespread fears, Evercore thinks the S&P 500 earnings per share projection of $274 can hold its ground. They cite robust margins and moderate dollar strength as key stabilizers.

This could take the limelight away from the “Magnificent 7” tech giants and present opportunities in the unglamorized remaining 490 companies in the S&P 500. The astute trader may want to consider options spreads on undervalued industrial and consumer discretionary stocks, sectors likely to gain from this increased dispersion.

Oil Prices Below $65 – A Catalyst for Change

A peaceful solution in Ukraine, or the Middle East, possibly could put oil below 65 dollars per barrel. While these events would cool inflationary pressures, they would also have impacts on energy stock and commodities trading.

This could mean a temporary retreat in the oil majors such as ExxonMobil and Chevron to stock traders, while options traders may want to consider bearish trades such as buying puts on oil-linked ETFs. The decline in inflation may also fire up risk-on sentiment, boosting sectors such as retail and technology.

China Surprises to Upside in Equity

Though there remain significant challenges, Evercore says Chinese markets could outperform in 2025, driven by stimulus and revitalized optimism.

This is a call for traders to reassess exposure to emerging markets.. Crypto traders should heed this because any rebound in Chinese equities could help sentiment for tokens with links to Chinese projects or supply chains.

Credit Market Turmoil

Widening credit spreads could introduce significant volatility, even without a recession. Worries about China or U.S. policy could roil corporate debt markets.

This certainly serves as a stark reminder for options traders focused on credit-sensitive sectors, such as financials, to look into protective puts or hedge via credit default swaps. Crypto markets could be in turmoil, too, as broader financial stability concerns spill over and perhaps reinvigorate demand for decentralized finance protocols offering alternatives to generate yield.

Subdued Equity Volatility – A Calm Before the Storm?

While a volatile year akin to 2018 is Evercore’s base case, the firm also sees potential for an unusually calm year, reminiscent of 2017.

Lower stock correlations and reduced uncertainty could compress the VIX, creating opportunities in small-cap equities. For options traders, lower implied volatility means cheaper premiums, making this a prime time to deploy long strategies like call or put purchases on small-cap stocks.

Tesla’s Valuation Race: A Lesson for All Traders 

As Morgan Stanley revised its price target for Tesla stock to $430, with a bull case of $800, it brought into light the market’s obsession with embodied AI and autonomous mobility. Tesla’s Network Services, which include Full Self-Driving and software upgrades, are increasingly becoming the major driver of recurring revenue.

Stock and options traders should note Tesla’s broader trajectory in embodied AI. If self-driving vehicles see regulatory tailwinds under Trump, Tesla’s bullish case could gain traction. AI’s Growing Market Influence: A Double-Edged Sword

Microsoft’s creation of a new AI-focused group, Core AI – Platform and Tools, is a signal that the relentless tech sector is marching toward AI-driven growth. The mission of this group serves to show the full development of AI applications, pointing toward the sustainability of the sector.

For stock traders, this is a clear indication to remain invested in AI-driven growth stories. Options traders can use bull call spreads or long straddles on technology giants like Microsoft to profit from expected volatility around AI developments.

Crypto Trading in 2025: How to Deal with Policy Shifts and Innovation

Crypto markets could see both opportunities and headwinds with a Trump administration: while reduced regulatory clarity might hurt institutional adoption, innovation in DeFi and the space of tokenized assets could gain traction.

The crypto trader should follow any key policy announcements. A long-term holder can stake high-value tokens; at the same time, active traders can utilize the high volatility through a perpetual contract or options.

In an unpredictable market environment, mastering skills like patience, flexibility, and strategic thinking is essential. The BullRush Trading Arena provides a gamified platform for traders to enhance their skills, tackle challenges, and stay ahead of market fluctuations.

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