In the stock market, the biggest single-day surges almost always come in the aftermath of a correction, crash, or outright panic. Historical data supports this: of the 30 best trading days in the past 30 years, 24 occurred with significant downturns eating up media headlines everywhere.

Why does this happen? I’ll explain: Market selloffs function as a cleansing mechanism, often poorly positioned and overleveraged traders are forced to liquidate their positions first. Then, strategic investors step in. It’s like shaking a tree. This is no different than a biological system you may find out in the natural world.

Right now, we’re in one of those cleansing moments, and just as a huge Fed meeting begins on Wednesday. The market has been in a three-week freefall, one of the swiftest selloffs of the last few years.

For those of you who follow me on X, you know I’ve been highlighting how this downturn is setting up one of the most ironic—and potentially profitable—trading environments we’ve seen in a long time.

So let’s break this down: a massive panic-selling event occurred right before all of the following catalysts materialized:

1. The largest spending bill in U.S. history was announced.

2. Inflation appears to be stabilizing.

3. Interest rates are near 52-week lows.

4. A wave of deregulation is hitting multiple industries.

5. Tax cuts, from eliminating taxes on tips to major corporate relief, are being locked into law.

You can’t make this up. The timing is just jaw dropping to see the sell-off literally a day before all of those above events occurred.

Meanwhile, U.S. households are sitting on record levels of cash in money market funds. Hedge funds are rumored to have suffered significant losses. And some of the best companies in the world have just collapsed to six- and twelve-month lows—precisely as rates are dropping and deregulation is kicking in.

Huge swaths of cash are just waiting to go to work now:

Also, remember, as rates get slashed, that changes the risk free rate and DCF calcs of countless models. I’m thinking the arbitrage between political capitulation and market opportunity has never been greater.

One thing I am wondering about: is Warren Buffett about to incinerate $300 billion in cash being out of the market? Bessent is going to weaken the dollar to increase exports at scale. Ouch!

How Can One Play This?

If you’re looking for where the next major plays might emerge, I’m starting with tech names tied to the largest growth environments in the public and private sector, and those that have strong fundamentals and sold off massively in just the last three weeks. For example, the coming government IT overhaul should be the largest in history. The government’s FedRAMP program is set to upgrade decades-old systems, as countless officials have spoken about cobalt and upgrading these systems, while opening the floodgates for select software and infrastructure providers to pave way for a far more efficient future.

Based on my research, the following companies are whitelisted by the FedRAMP program or engaging in more government processes and could be utilized throughout the year (please do your own DD on this!):

$PLTR, $CSCO, $GOOG, $AMZN, $ESTC, $NOW, $IBM, $CRM, $MSFT, $ORCL, $SNOW, $ZS, $OKTA, $NET, $PANW, $SPLK, $TWLO, $WDAY, $FIVN

Related to the above, here’s a scan I recently ran showing 59 stocks down 20% or more in the last 20 days with positive FCF, at least 50% gross margin, revenue growth of at least 10%, market cap above a billion, and in one of the major indexes:

Fate loves irony. This sell-off is rich of that statement.

Think bigger.