- Professional trader John Salama has ridden the market rally for the last year.
- US stocks will remain hot for at least the next six months, even if there's a pullback.
- Here are the five parts of the market that investors should target, along with bitcoin.
Swing trader John Salama has been hyper-bullish — almost to the point of hyperbole.
Just over a year ago, Salama predicted that the S&P 500 would rebound and rally into year-end. He then called for continued strength in early 2024 and said a few months later that the S&P 500 would climb to 6,000 before 2025, before doubling down on that forecast over the summer.
Though those calls may have seemed unrealistic then, they've mostly come true so far.
The S&P 500 is up 22.7% to 5,850 in 2024, which has shattered even Wall Street strategists' most optimistic predictions. Before the year, the highest price target for the index from major investment firms was 5,100, hit in early March.
Salama has ridden what's been a nearly nonstop rally, as have those who listened to him.
With 2025 near, the trader recently told Business Insider about his latest head-turning call: the S&P 500 will breach the 6,500 milestone by May 1, which would be an 11% jump in six months.
Such a projection may seem ambitious, given that the index has already had a mammoth run. It's set to score a double-digit gain for the fifth time in six years and the 11th time since 2009.
While those past gains can't guarantee future success, they also don't suggest that US stocks are now set up for failure. In fact, that historical precedent is a great comfort to Salama.
"I don't want to stand in the way of the market going higher because people think it's gone up too much," Salama said. "That's silly. Go look at an S&P return quilt of the past 50 years — how much is red, how much is green, and how much down it is. And the market still has room to go."
Watch for a buying opportunity soon
Stocks often struggle in the autumn, especially in election years.
But the opposite has taken place in 2024, as the S&P 500 has broken through to new levels thanks to compelling catalysts like strong earnings and falling interest rates.
"These were supposed to be the bad seasonality, bad moments of the market — and yet we crank higher to new all-time closing highs," Salama said.
With that said, Salama said he can't rule out a hiccup in the coming weeks. The trader was cautious about the dozen or so trading sessions before the pivotal early-November election, saying that the market could take a quick breather until afterwards.
"It's possible you get a bit of a perverse reversal, as it were, going into the election," Salama said. "Markets hate uncertainty. Right now, it's kind of a toss-up between the two candidates. You're going to get a vol crush, I'm pretty sure — barring some unforeseen circumstance."
The market's near-term risk-reward setup isn't too enticing, Salama acknowledged. Although he's confident in stocks, he said the S&P 500 may slip to the 5,700 mark or just under 5,600 in what would be a small but sharp pullback.
However, Salama would likely put money to work if the index gets there, as he doesn't think holding money in cash is a sound long-term strategy.
"If you're in cash on the sidelines, collecting your couple of percent, you missed the two-year bull market where it's done about 24% a year," Salama said. "So I'm not going to be holding that back."
5 industries to target — and a bonus idea
As for which parts of the market look enticing, Salama shared five industries that he's fired up about — even though he noted that stock valuations are unusually rich.
While valuations are correlated with long-term returns, the trader said paying undue attention to the S&P 500's earnings multiple can backfire spectacularly.
"If you use valuation as a timing/trading mechanism, you would've missed out on a two-year bull market," Salama said. "And when people are going back and forth on, 'there's going to be a soft landing or a hard landing,' you miss the whole takeoff. So I can't get consumed with valuation."
Salama added: "In terms of valuations, the drift is higher. So I don't want you be betting on a collapsed valuation."
This market is healthy because investors are drifting away from technology stocks and toward less-flashy industries and sectors like banks, real estate, and homebuilding, Salama said. Such rotations are "the lifeblood of a bull market," the trader remarked.
"These are trends that you cannot ignore," Salama said. "You got that rotation into other parts of the area. We're not talking about 'Mag Seven' only anymore."
Each of those economically sensitive areas has gained major momentum in recent months as mortgage rates fall, though they've slipped recently during a few forgettable market sessions. Salama believes those trades still have plenty of life, including homebuilders, which he said were the "new girl at the ball" as lower borrowing costs bring buyers off the sidelines.
"Homebuilders, the whole real-estate story is really into focus here as the Fed is cutting into 2026," Salama said.
Salama said he has exposure to those groups through options on exchange-traded funds like the SPDR S&P Bank ETF (KBE), the iShares US Real Estate ETF (IYR), the iShares US Home Construction ETF (ITB), and the SPDR S&P Homebuilders ETF (XHB).
Although semiconductors are no longer all the rage in markets after losing some steam, Salama said they're worth sticking with since their uptrend remains intact.
Gold miners are also a compelling option as the yellow metal hits record highs on the back of geopolitical uncertainty and continued government spending. The VanEck Gold Miners ETF (GDX) has been a strong option and should continue to be into 2025, in Salama's view.
Lastly, Salama said investors should have at least some exposure to digital gold — better known as bitcoin — through products like the Grayscale Bitcoin Trust (GBTC).
"Once it breaks out, it's going to break out," Salama said of bitcoin. "The highs are $73,000; we're at $67,000. We all know it can do that very quickly. And MicroStrategy (MSTR) tends to lead the bitcoin move, and MicroStrategy is doing wonderfully — up 500% in the past year. So that shows no signs of letting up."