The big players in the market tend to move big, and they also tend to move later in the last innings of the game. In this case, the game is never over, so the innings are measured by where the business cycle currently sits, mainly where the next step will be. MarketBeat’s call options scanner has caught an unusual breakout in a significant ETF that acts as an economic indicator.

Last week, options traders stampeded into the iShares 20+ Year Treasury bond ETF (NASDAQ: TLT) on the call side. When traders buy calls, it is typically because they expect an upside move in the following expiration dates; now, why is this ETF important? This one holds a basket of long-term bonds, and their prices move opposite their interest rates.

So, betting that this ETF will increase in price is also a subsequent bet that interest rates are on their way down, something that the FED has made public in their latest meeting. When these rates are cut is something you will discover in just a bit; for now, your focus is on why stocks like Target (NYSE: TGT), Costco Wholesale (NASDAQ: COST), and even Home Depot (NYSE: HD) are set to rally on this latest bet.

Getting the mechanics

Because the FED funds rate is directly tied to the rest of the money markets, also known as bonds, when one goes down – or is expected to go down – the rest of the asset class tends to follow. When you look at the FedWatch tool at the CME Group (NYSE: CME), the picture starts to make a lot more sense.

This tool allows you to tap into the market’s expectations for the direction of interest rates, which are currently pricing a high probability of rate cuts coming in May of this year, whereas previously, markets expected the cuts to come as soon as March.

Because markets are forward-looking, they won’t wait until May to start shifting their investment dollars; the move will be happening now. While some investors may be headed straight for consumer discretionary stocks, as history tends to favor them during lower interest rate environments, uncertainty calls for additional protection.

Now that bank stocks like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) have reported rising delinquencies and charge-offs on their credit card departments, it will be of utmost importance for the American consumer to get a bit more breathing room to handle their interest payment on balances owed.

This is why most consumers won’t be running back to the discretionary names. Instead, they find that their points earned on everyday purchases (like groceries at Costco and Target) will be the best place to allocate this newfound disposable income.

Oh, and guess what? It is tax season, so home supplies on a stagnated home market mean more revenue for Home Depot. But you already know this if you have been following this thread about the best way to play a breakout in the construction stocks sector, which even Warren Buffett has begun investing in.

Any money left?

Now the question forms around the timing of this move, whether there is still enough money left to be made or if traders have squeezed all the juice out of the markets so far. Well, there is only one way to figure this out, so sit tight and get your pencils ready.

Looking into Target stock, which is a long way from its all-time high price of $268.9 in 2021 (by the way, which was the last time interest rates were on a downward trend), there seems to be plenty of room left to move up.

Analysts at Morgan Stanley (NYSE: MS) think it could go as high as $165.0 a share based on their price targets. Even institutions such as Illinois Municipal Retirement Fund upped their stakes in the stock by as much as 72.0% so far this month; the story begins to make a lot more sense now, doesn’t it?

As far as Costco goes, it is not only part of a large capitalization group of stocks operating in the consumer staples corner of the market (known for its immunity to the business cycle), but it is also one of the few that carry Berkshire Hathaway (NYSE: BRK.A) stamp of quality.

In case that wasn’t enough, Oppenheimer and Loop Capital analysts upped their price targets to $760.0 and $755.0 a share each, implying a 7.0% upside from where the stock trades today. Considering that it flirts with making new all-time high prices today, you can count on bullish momentum being by your side on this one.

Last, Home Depot has also attracted some analyst love, especially from Piper Sandler (NYSE: PIPR) and TD Cowen, placing a $400.0 and $415.0 share target each. This one is similar to Target in that it is still below its all-time high price of $420.6 from 2021 despite the significant indices making all-time highs today.

Get ahead of the curb before the more significant money shift is here, consider the best name on this list that fits your portfolio, and do yourself a favor and stay away from any financing until you can get yourself some better rates in May.