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Weekly Market Overview

Hi Traders,

 

Market indicators suggest the S&P 500 may be poised to reach yet another record as the markets react to the reality of Donald Trump’s re-election. With renewed momentum around the “Trump trade,” assets tied to his policies are already showing significant movement overnight.

 

The dollar, bitcoin, and Treasury yields are climbing, while Trump Media & Technology shares are seeing a notable 30% premarket jump. More broadly, a Trump administration is anticipated to boost sectors that have led market gains in recent years—especially big technology.

 

Tech Stocks Stand to Gain

 

A new Republican administration could see major AI initiatives backed by the U.S. government, benefitting key players like Microsoft, Amazon, and Google. Defense-related AI projects may also drive growth for Palantir Technologies, given the likely focus on technology advancement in national security.

 

Potential Shifts in Regulation

 

Regulatory changes could also be on the horizon. The current head of the Federal Trade Commission, Lina Khan, has long been a thorn in big tech’s side, challenging major mergers and acquisitions. Trump’s running mate JD Vance recently surprised the business community by supporting Khan’s approach, advocating robust regulation of tech giants and backing efforts to break up monopolies.

 

However, with influence from Elon Musk, there’s a strong chance the new administration would replace Khan, a move expected to benefit big tech by reducing regulatory pressures from the FTC. While anti-trust issues with the DOJ would remain for companies like Google and Apple, Khan’s potential exit would likely be seen as a positive shift for the sector.

 

Tesla Positioned for Strong Gains

 

With Trump's victory, Tesla is likely to emerge as one of the biggest winners. Expected reductions in electric vehicle rebates and tax incentives could weigh on the EV sector overall but give Tesla an edge due to its unique scale and position. Moreover, Trump’s selective import tariffs could limit cheaper Chinese EVs from flooding the U.S. market, creating a favorable environment for Tesla.

 

Trump’s administration is also likely to accelerate the development of autonomous driving technologies, with potential benefits for Tesla and Waymo. Some of Tesla’s 2026/2027 goals could even be fast-tracked to align with China’s aggressive timeline for autonomous vehicles. In this scenario, Tesla’s stock could see an additional boost of $40-$50 per share if autonomous driving initiatives advance ahead of schedule.

 

- The Team at Altos Trading

 

In the next article, we look why Warren Buffett’s Berkshire Hathaway has paused its stock buyback streak, a move suggesting the legendary investor views both his company and the broader market as potentially overvalued.  

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Warren Buffett’s Berkshire Hathaway has hit the brakes on its longstanding stock buyback trend, raising eyebrows across Wall Street. Despite a cash reserve of over $325 billion, Berkshire chose not to repurchase any of its own shares in the third quarter—a shift that may suggest Buffett sees his company’s stock as overvalued at current levels.

 

This decision ends a six-year streak of buybacks and aligns with Buffett’s cautious philosophy. The legendary investor has consistently stated he’ll only repurchase shares if he believes they’re trading below Berkshire’s intrinsic value. With Berkshire’s Class A stock currently trading at around 1.6 times its book value, Buffett’s restraint signals a prudent approach amid potentially inflated stock prices.

 

In fact, Berkshire was a net seller of stocks last quarter, further boosting its cash position to record highs. Analysts interpret this move as a signal of caution, indicating that Buffett is willing to hold off on new investments until valuations become more attractive. Berkshire’s lack of buybacks implies Buffett’s “risk-off” mentality, suggesting he may be waiting for a more favorable entry point.

 

Beyond Berkshire, this cautious stance could reflect broader market concerns. Some financial experts believe Buffett’s wariness hints at a potentially overvalued market. The current environment, with high valuations and potential economic headwinds, may not present compelling buying opportunities, even for a cash-rich firm like Berkshire.

 

Buffett’s decision to build cash rather than buy back shares also highlights the patient investment approach that’s been a hallmark of his career. With market volatility and uncertainty looming, Berkshire’s record cash pile signals Buffett’s readiness to seize opportunities when valuations align with his standards.

 

For investors, Berkshire’s caution may serve as a cue to evaluate current market valuations and consider whether today’s prices justify the risk. While Buffett waits for the right moment, investors may want to think twice before following the herd in a market he seems content to watch from the sidelines—for now.

 

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Disclaimer:

 

The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so.

 

Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services.

 

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