President Donald Trump again stepped back from the brink, and traders are cashing in on what they called “TACO Tuesday.”
Financial analysts tend to agree with the retail traders—with some caveats.
“This could be a boom for tech stocks now with this off-ramp in Iran,” Wedbush analyst Dan Ives told Fortune.
Ives went further in a Wednesday note, saying more than one month of Iran turmoil has created opportunities for traders to benefit.
“We continue to strongly believe the nervous geopolitical backdrop over the past few months has created an oversold tech environment for Mag 7, software names, and many tech winners in the AI revolution,” Ives wrote.
Still, others cautioned that while the TACO trade is alive and well now, that doesn’t mean it will always deliver.
“Investors are noticing the pattern, and may they extrapolate that pattern into the future. I think that’s reasonable, but we would caution not to over extrapolate that,” Michael Reynolds, vice president of investment strategy at Glenmede Investment Management, told Fortune.
Reynolds added that while the trade has been consistent for now, investors should not be confident it’s foolproof.
“We would caution that if investors were to completely see through all of those statements, they may be setting themselves up for a nasty surprise in a situation where there is a follow through,” he said.
