The Biggest Market Reset in 25 Years. Get READY.

This new rule could literally change the entire market. And if investors aren't ready for the impact, they could get left in the dust. Joining us today is MarketBeat analyst Jeffrey Neal Johnson going over a new rule and the impact it could have on the entire market. There's five specific stocks we're going to get to that could see a big boost from this new ruling. But every investor needs to be prepared. Jeffrey, let's talk about what this ruling is. It may have the word day trading in it, but I think every investor needs to know what is going on. Right. So this is actually going to be huge. The rule change affects pattern day trading and the change in this rule is set to bring a massive wave of volatility into the market. Now, let's talk about that volatility. You've got a new rule that opens up the door for more investors to come in. What kind of impact could that have on the broader market? I think it could have a huge impact on the broader market. Previously, there was a $25,000 buy-in to day trade. Day trading is highly speculative, of course. So that was a protective measure. By removing that and saying that there no longer is a buy-in, it allows higher risk traders, traders who might trade stocks as well as speculative options. It allows those higher risk traders to interact more with the brokerage, which creates a lot more volatility in certain stock areas and certain stock sectors. And it's also going to create a lot more volatility across the market in general. Let's talk about where that volatility could show up. I know I hear from viewers all the time who are upset that one of their favorite stocks is getting influenced by what day traders are doing. Let's talk about which areas and which sectors of the market might be hit the most with this new ruling and these new investors coming in. So you're going to look for any sector that could be essentially gamified. So you're looking at things like biotechnology and pharmaceuticals because their daily action fluctuates on FBA rulings. So you could see a lot more volatility pre-FBA rulings for some of these stocks. Anything that's pre-profit technology or high-end technology, high, fast-moving technology, or bleeding-edge technology. Stocks like Nvidia, stocks that are in AI, stocks that are in a lot of the things that I cover, such as the EBITDA market. You're going to see more volatility flow into those because of the waves that happen naturally in these pre-profit technology companies where they announce, the stock shoots up, then a bunch of shorts push it back down. You're going to see a lot more gamification in that area. Then you're going to see more volume in the stock derivatives of the already gamified parts of the finance sector. So you're talking cryptocurrency and meme. So the cryptocurrency sector, things like Strategy Inc., cryptocurrency ETFs, they're going to get played a lot against the cryptocurrency market. Then of course, the start of all this, the meme stocks, things like GameStop, etc. You're going to see a lot of volatility in there because you're taking the high-risk gambling activity that goes on and you're trying to drag that over into the SEC-regulated markets so that you can capture the volatility and the profit from that. Yeah, so many implications from this rule change. Let's talk about what it is. So this is a new SEC ruling. It just happened about a week ago. You already mentioned the $25,000 threshold changing, but let's dive into exactly what this rule change is and why it opens up the market for day trading even more. The rule is FINRA's Rule 4210. It basically regulated day traders to four-pattern day trades in a day. So if you buy a stock and sell a stock the same day, you would get hit by your brokerage with a day trade. When you got to five of those, a lot of times your brokerage would either lock you down until you had $25,000 in your account or they'd kick you off the brokerage platform completely. If they locked you down, you had to put $25,000 in, and that was the only way that you could continue to trade, and you had to go off market. So now, with that rule completely abolished, anybody that has a margin account, $2,000 or more in their account, can actively start day trading. That allows you to buy and sell as much as you want on the day without having to worry about the pattern day trade rule. So that puts the burden of regulation over onto the brokerages. A lot of these brokerages are tuning up their margin algorithms to analyze your trading or risk, and then from that, they will adjust your margin availability as to whether you're trading straight on cash or whether you're a good enough trader to actually trade with their money. That's good news if you're looking to get into day trading even more than maybe you are right now, but it's also really good news for those brokerage firms that you're talking about. I think this is going to give some really big opportunities to a lot of those firms for more growth and potentially more users in the future. We have a brand new article out on marketbeat.com right now. You can scan the QR code or click the link in the description. It goes into deep detail into some of the brokerage firms that could really benefit the most. That's also what we're going to cover in this video, but if you want to go in-depth on this topic, make sure to scan the QR code or click the link in the description to get that article for free right now on marketbeat.com. So, Jennifer, let's talk a little bit more about why this change is such a good thing for brokerage firms, so much so that they actually kind of led the way in making this rule change happen. Yeah, they really have. You know, this was proposed back in like 2025. A lot of the brokerage firms have consistently and constantly lobbied FINRA and the SEC for this rule change, so much so that some of the brokerage firms have even already tweaked their algorithm to allow this type of trading on their platform. So, it really is a big windfall starting first for the brokerage firms, but then I think that it will continue to be a windfall for the speculative sectors of the market. All right, Jeffrey, so you have a list of five different brokerage accounts that could see a big boost from this new rule change and all the new investing that comes with it. But before we get into the specific names, I want you to just talk about why this could be good news for brokerages and maybe not so good news for some investors. You'll see the brokerages collecting a lot more fees because there'll be more transactions. People that can enter in on the morning dip and then when the stock recovers, collect their 3%, 4%, 5%. They're going to do that because that's part of the gamification that comes with allowing this day trading. The reason that it's not such a great idea is because the numbers still, the statistics still will not change. The ongoing statistic that Fenner keeps is that 96% of pattern day traders lose their share. I mean, it is without a doubt the most speculative, the closest to gambling that you can come and still be trading stocks and financial instruments. So, the removal of this pattern day trading law is set to bring in this wave of speculative cash and a lot of that cash is going to fall into and stay in the market because as these pattern day traders start to learn that pattern day trading is not as easy as it looks, they will pay for that education with their hard-earned capital. And we don't want that to be one of you. So, that's the warning in this video today too. Let's talk about those five brokerage companies that could have a nice little boost from this change. What's the first company on the list, Jeffrey? So, the first one on our list is the company that started this all. It's Robinhood. Their actually started the democratization of finance because of the pattern day trading rule. Because their platform is already gamified, I think that they will see the biggest upswing when they actually release their users to pattern day trading. Yeah, this one makes a lot of sense on this list. It's probably the name everybody thought of first. Let's talk about if the stock has seen any kind of movement since this rule was announced just last week. The news provided it a pretty decent jump, but the volatility in it, it's up about 28% over the past 30 days, but it's still down 20% over the year to date. So, even though we've had a nice little jump over the past 30 days, there's still a lot of room to move to bring them to their high. And then there's a little bit more room even past that to take them to the analyst instance. It'll be interesting to see what shows up in their earnings, not just this quarter, but the next couple of quarters this year to see if there really is an impact from this change in the SEC ruling. Let's get on to the second company. We've got four more names to cover yet today. What's the second company you're looking at? All right. So, Webull is the next one that we're looking at and their ticker symbol is the ULL Bull. The reason that I like these guys is because they were one of the lobbies that helped push this law through. And because they had lobbied for this, they kind of knew where it was going and they had already set up the infrastructure to regulate this from day one. So, as soon as this law passed, Webull customers were allowed to instantly start day trading. So, they have a decisively first mover advantage that allows them to capitalize on this. While the other members on this list are kind of starting to make the moves towards that, Webull has already taken control and jumped in front. Yeah. Again, it's fun to talk about stocks that a lot of our viewers are very familiar with. These might be platforms that you're in all the time during your retail investing. Let's talk about what sets Webull apart from Robinhood and are we seeing any kind of different price action with this stock? Webull is more of a socialized, it has more like of a social media aspect to it, where Robinhood is a little more gamified. I think that the pull of it having first mover advantage has allowed it to take some of Robinhood's customers away from them. They're up 8 to 10 percent on the last five days and they're up 36 percent over the past 30 days. So, that is a little bit of proof in the pudding that because they came out the gate and said that they were going from day one, they're seeing a little bit more action than some of the other ones on this list. Yeah. Let's get on to the third name. This is maybe a little bit less familiar name for sub, but this one actually has earnings coming up very soon. Yeah. So, it's Interactive Brokers. They report after the market closes on the 21st of April. It's going to be interesting to see what happens with them because Interactive Brokers was originally designed for this kind of trading, where Robinhood and Webull were more targeting the $25,000 and below non-day trader. Interactive Broker was targeting the $25,000 and above day trader. So, their technical assets and their ability to analyze stocks are more geared towards day trading. People that were on Robinhood and were on Webull that were interested in becoming pattern day traders will probably want to move over to Interactive Brokers just because of the technical support that it provides, that platform provides. And their earnings today, specifically their guidance today will be a barometer in the market to tell us what they expect from the activity that comes from this. Because where most of their traders currently are day traders, the flood of new users coming into their system will show the demand for that day trading and that day trading support. Yeah. I think the question is, how long will it take for that to actually show up? If it does actually come, this is all speculative we're kind of guessing about the impact that this rule change could make. So, if that does come to fruition, how long will it take to show up in their earnings? I mean, this rule just happened a week ago. Consumer behavior is going to take a while to shift. I don't know if anyone's actually shifted platforms yet who's a retail investor out there. So, talk about that timeline a little bit. What you want to look for in the next earnings report, you want to look for the guidance in this earnings report, right? But in the next earnings report, you want to look at the user numbers. Have their user numbers gone up? How much volume has gone up in their trading account, the return on investment for each user? When you look at those numbers, if those numbers are on the rise or significantly higher, then it's a safe bet to assume that the predictive money and the speculative money has moved away from the platforms that they're on and into the actual market. All right, let's get on to that fourth stock in the market that has potential to be impacted by this rule change. Okay, so the fourth one is going to be Charles Schwab. They have another great platform. They have the thinkorswim platform. That platform is also designed around the active trader, the day trader, or the swing trader. And so, as their algorithm becomes more adept at the day trading side of things, and as they loosen up the regulations surrounding day trading, you'll see a lot of people moving towards Charles Schwab or their thinkorswim platform. And you'll see a lot of people that join Charles Schwab to grow their account to a day trading account, immediately start day trading. Some of these, like Charles Schwab and Interactive Brokers, their tools are specifically developed for the day trader. Robinhood and Webull are building tools like that, right, with the legend, the Robinhood legend system, and then Webull's system for day trading, too. But they weren't designed from the start for that, whereas Charles Schwab and Interactive Brokers were designed from the start for high frequency active traders in mind. Yeah, this one is a bigger name, too. I think about Charles Schwab. This isn't the only thing they do. This company has a lot of other things. And so, I'm wondering, is this enough of an impact to really move the needle on this company's success? You know, I think it will be because with the movement of the pattern day traders, you're going to have to have a certain balance in your account. You're going to have to have a certain amount of activity. The increase of activity alone, the fees that they charge, that's going to cause a real nice jump to their bottom line, I feel. And I think it'll also cause a nice jump to their deposits as well, which then gives them more money to work with in the long run through their other divisions. Charles Schwab is definitely the diversified play in this market. If you are a investor that prizes diversification so that if suddenly, one day they reverse this rule, which could happen if they choose to reverse it, if it gets crazy out there like it did post .com era and they choose to put this rule back in place, Charles Schwab would probably be the brokerage firm that suffered the least. So, they reported earnings on April 16th. And even though they reported that they saw strong growth in their user base, they reported an interest revenue miss. They suffered because of that, which creates a nice entry point for people that are accumulating the stock. But the miss really wasn't their fault. I mean, it was really a geopolitical situation that caused them to miss. And so, their last earnings was good. Their guidance seems to be good. And they're up 24% over the year. So, they seem to be hanging in there with the rest of the brokerage firm. I think this is the one I want to add to my Bridges Buys Watchlist. This is a watchlist I have. It's a paper trading watchlist on marketbeat.com slash Bridget, where I add one stock per video that we talk about to the list to follow how it moves over time. I have a lot of very speculative names on that watchlist because we talk about a lot of smaller up-and-coming companies on the channel. I wanted to add a little bit more of that diversification you were talking about, Jeffrey. And I think this one is a good entry point with where it is today. So, I'm going to add Charles Schwab to the Bridges Buys Watchlist. You can scan the QR code or click the link in the description to follow along with the watchlist and see what other names are on that list, too. All right, Jeffrey, let's get on to the final stock on your list today. What is that last company? So, the final one is CBOE Global Markets, and they're CBOE. And they are the behind-the-scenes player. They're the toll booth. They're like the collector of tolls for the entire options market. So, when the speculative plays start happening, you're going to see a lot of these plays being done in options. You're going to see a lot of these brokerage firms start embracing, Robinhood's already embraced it, the predictive market side of things. And the predictive market side of things is really just an options play. It's really just a very complicated options play. So, all of that increase in the predictive market side, the increase in the regular market side, and then the brokerage firms choosing to grow their user base through adding even more predictive market action in their platform, all of that funnels down to the market maker, which is CBOE Global, right? They will see a massive increase in volume coming through their network, which will then also show in their earnings report, theoretically. But as the volatility in the market increases across the board, they will be the one that is the picks and shovels, behind-the-scenes player. And I always like to throw a pick and shovel play in there. Yeah, picks and shovels are always good to look at. And the volatility that you talked about can be hard to manage, and it could get even harder to manage as more volatility is possible with this new rule change. If you are looking for a new tool to help you manage all that volatility, make sure to watch this video. I just did an interview with Keith Kaplan with Tradesmith, who showed how his new AI signals tool works. It's a fascinating watch. You can check out that video