The Fed’s Buy Alert for the Next 12 Months VIEW IN BROWSER
BY LUCAS DOWNEY, EDITOR, TRADESMITH ALPHA SIGNALS It finally happened. The Federal Reserve cut interest rates by 0.25 percentage points… the first cut in 2025. I’ve been preparing you for this moment for months – highlighting how this shift in policy is a catalyst for stocks. And in terms of the returns to come, one sector towers above the rest. Two months ago, I offered a signal study detailing how technology stocks will be a major beneficiary of lower interest rates. Today we’ll take this idea a step further. We’ll slice up the tech sector, revealing the best subgroups to benefit. If you’re reluctant to add to stocks at all-time highs, today’s historical proof should have you second-guessing that stance. One of the biggest market tailwinds in years is facing us today. Make sure you’re positioned to make the most from it. | Recommended Link | | | | Maryland based company’s mathematical breakthrough gives regular individuals crash warnings BEFORE they happen, turning Wall Street’s edge against them. Its unique volatility fingerprinting detected warning signs before markets collapsed in 2020. Now it’s flashing new signals. Click here to get the full story. |  | | When Tech Reigns Supreme We are living through one of the fastest risk-on rallies ever. From the market lows on April 8, the S&P 500 has jumped about 20%. Even more impressive are the gains in technology stocks. The Technology Select Sector SPDR Fund (XLK), which holds names like Nvidia (NVDA) and Broadcom (AVGO), has jumped about 35%. Semiconductors, as tracked by the VanEck Semiconductor ETF (SMH), which holds a basket of large-cap semis, is up a staggering 50%: 
This Tech-led outperformance is partly due to the AI infrastructure buildout that’s in full force. It may seem like this runaway train is overheating… But don’t hop off yet. The latest Fed rate cut will add fuel to this red-hot group. Using that study from two months ago, we know that when the Fed cuts rates and the economy isn’t in recession, plus doesn’t fall into one 12 months later, Tech is the runaway leader by sector. This has happened seven times in the past 30 years. On average, the best-performing sector is Information Technology, which has gained 55% over the following 12 months: 
And we’ll soon have two more cases to add to the dataset. This November and December will be one year after the Fed’s two 0.25 percentage point rate cuts last year. A lot can happen in three months, but odds are strong that markets will be higher this winter than they were last. Translation: You need to be in stocks… and especially tech stocks ahead of 2026. Now let’s take this study a step further. I used the same non-recessionary rate cut framework and studied returns for the three major S&P 500 Information Technology Industries: - Semiconductors/Semiconductor Equipment
- Hardware
- Software
Across the board, we learn that these three areas boom in this economic climate. Twelve months after non-recessionary rate cuts: - Tech hardware stocks surge 49.1% on average
- Tech software stocks jump 51% on average
- Semiconductors soar 72.2% on average
This is the reminder to bet on tech shares now and into 2026: 
Now, let’s dive into an AI giant to play this tech leadership. Oracle (ORCL) is an All-Star AI Stock If you’ve turned on the news recently, I’m sure you’ve seen Oracle’s founder Larry Ellison standing beside President Trump. January’s Operation Stargate brought together Oracle, OpenAI, and SoftBank to build AI infrastructure in the U.S. Further, President Trump continues to work through the TikTok deal with Oracle being part of the investor group. Oracle is at the center of some of the highest priorities in this nation. That has helped the stock soar 81% in the last year: 
But it isn’t hype that’s fueling this breakout. The cloud giant is putting up huge growth numbers recently. Revenues in 2025 clocked in at $57.4 billion and are estimated to surge to $82 billion in 2027. Diluted EPS in 2025 stood at $4.34 and is forecasted to balloon to $8.06 per share in 2027. With a forward runway this strong, it’s no secret why shares have been in high demand recently. But here’s where non-recessionary rate cuts help this story. Using the same framework as above, Oracle shares have returned huge gains when the Fed cuts rates into a strong economy with: - Six-month average returns of 19.4%
- 12-month average returns of 97.9%
It’s important to note, on the 12-month returns, ORCL shares were positive in all cases: 
But there’s more. Let’s keep stacking the odds in our favor. We are about to enter a seasonal bullish window soon. Over the past 15 years, Sept. 29-Dec. 3 has shown strong performance: 
More to the point, this two-month window has amounted to 6.3% average returns with a hit ratio of 86.7%: 
And as if on cue, news dropped Monday that Oracle would play a major role in the long-awaited TikTok deal. Bloomberg reported that Oracle would provide security for the popular social media app and recreate its algorithm. But we don’t need headlines to know Oracle is a great stock. Jason Bodner’s Quantum Edge score tells us that. To get that score, Jason uses quantitative analysis to identify top-performing stocks with the highest potential, using both fundamental and technical indicators. To strengthen the conviction, the Quantum Edge system monitors Big Money activity in these stocks, often before major price movements occur. By combining these measurable factors, we can generate a proprietary Quantum Score. Oracle sports a Quantum Edge score of 87.9, comprising an 85 fundamental score and 90 technical score. ORCL is right in the buy zone: 
Bottom line… Stick with high-quality technology stocks over the next year. Fed rate cuts have historically helped this group. Focus your efforts on identifying the best stocks benefiting from the AI buildout… this will narrow your search immensely. As we enter a policy shift that favors growth stocks, make sure to only buy top shelf… those will be the ones towering over the pretenders. TradeSmith software brings those names to you. The biggest winners vary each cycle, and that’s where tracking institutional money flows proves invaluable. TradeSmith software finds and delivers the top names racing higher day after day. If you’re looking for all-star stocks that can crush major index returns, check out Quantum Edge Pro. Find the stocks in which institutions are betting big. Follow the Big Money. And stack the odds in your favor. Don’t miss this seasonal bullish window. Learn more about the power of the Quantum Edge system here. Regards, 
Lucas Downey
Editor, TradeSmith’s Alpha Signals | 
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