Broader market leads as year-end clarity replaces chaos

• It continues to rotation not retreat.
• Year end push is great, Low Volumes present a risk.
• 2026 Set up – Mid-terms and Policy risk.
• Try the ‘Christmas’ Cheesecake.

Ok – so here we are….1/2 way thru the month and only 2 weeks away from end of year….We had the last FOMC meeting and honestly nothing between now and the end of the year – will do much to change the path of the 2025 performance.

Tech was the disappointment – we can thank the drama around the ORCL earnings…. but broader market did advance and that is important. Here is how it ended – The Dow rose 650 pts or 1.35% the S&P up 15 pts or 0.2%, the Nasdaq ended lower - losing 60 pts or 0.25%, the Russell added 31 pts or 1.2%, the Transports added 112 pts or 0.6%, the Equal Weight S&P (and here’s the tell) rose 65 pts or 0.85% while the Mag 7 lost 223 pts or 0.7%.

And again – you have to ask yourself – where was the action? (Hint – it wasn’t tech). All you have to do is look at the Value trade vs. the Growth trade – the SPYV advanced by 0.6% while the SPYG lost 0.1% or look at the S&P up 0.2% vs. the Equal Weight up 0.8%. SMID’s (small and mid-caps) enjoyed the company of buyers as well all while Tech is taking a breath….and while that may frustrate you – get a grip…Tech at +22.1% ytd is still the 2^nd best performer of the year – by a wide margin. Care to guess what sector is outperforming Tech?

Communications +31.5%. Now while both sectors remain market leaders—together accounting for over 40% of the S&P 500’s market cap—the divergence highlights shifting investor priorities within the broader “tech-adjacent” ecosystem.

The key reasons for this 2026 outperformance are due to the constituents…. a blend of digital media, social platforms, streaming, and telecom, which have benefited from unique tailwinds not fully shared with the more hardware- and semiconductor-heavy Technology sector.

Think strong earnings from the streaming/social giants, 5G momentum and telecom resilience and AI integration into advertising and monetization…. All while TECH has faced some headwinds around AI infrastructure spending and yes – those ‘valuation concerns. And it is also those concerns that are driving new money into the broader market.

Ok – back to the markets and what is notable is that all of this action is happening on lower and lower volume. And we know what that means—moves can become exaggerated. So, for now, enjoy the ride, but stay aware of the backdrop.

From a policy perspective, Congress is about to head into recess until the new year, so nothing meaningful is expected on the legislative front. The one potential wildcard left on the calendar is the Supreme Court decision on tariffs, which could come sometime over the next week and inject a bit of late-year drama.

Beyond that, the year is essentially over—and it turned out very differently than many expected. The economic data continues to lean strong. The labor market did not collapse. Inflation did not spiral out of control. Tariffs failed to deliver the shock so many warned about. And the Fed has now wrapped up its final meeting of the year.

Looking ahead, forward guidance for 2026 S&P earnings calls for growth of roughly 12%. And even that may prove conservative if AI and the broader tech revolution continue to reshape productivity and profit margins the way many expect. Here is where we want to keep our eyes on the quantum space and you can easily do that with the QTUM etf up 42% ytd.

What we don’t yet know is who will be named the next Fed Chair and how the mid-term elections will play out.

Polymarkets have leaned heavily toward Kevin Hassett as the obvious choice—but the field is still open. Kevin Warsh, Chris Waller, Michelle Bowman, and the dark horse, Rick Rieder, all remain in the conversation. So, the game isn’t over until it’s over. While Hassett may be the favorite, it wouldn’t be a stretch to imagine Trump letting the market settle into that expectation—only to surprise everyone with a different pick. History suggests that’s always a possibility.

The problem? Markets don’t like surprises. They want clarity. And at this point, a decision that deviates from expectations could trigger a negative knee-jerk reaction—not necessarily because the alternative is wrong, but because expectations are firmly set. A decision that represents the expectation - at this point should not cause any major move in either direction – because the expectation is already built in. And as we know, markets react faster to changes in narrative than to fundamentals themselves.

And for now – the Polymarkets are also predicting that the Dems’ will take back the house leaving us in gridlock – which is exactly where the market wants to be because it forces cooperation and eliminates the far left and far right. The chaos expected in the first half of the year will be driven by the much of the uncertainty around this November event, but I still expect 2026 to be a good, investable year.

For now – no one is paying much attention to any of the eco data over the next two weeks – because it is not going to change the outcome. The only thing I would say is – if you are going to be away from your computer over the holidays but don’t want to miss an opportunity – just place GTC orders in your account to take advantage of an unexpected move in ‘either’ direction.

Bonds did little and yields did nothing. The 10 yr is yielding 4.17% while the 30 yr is yielding 4.82%. The levels to watch – 4.50% on the 10 yr and 5% on the 30 yr. Levels we are nowhere near.

Oil is trading at $57.50 and remains well within our range - $56/$60.

Gold is rocketing higher…it was up $50 yesterday and is up another $50 today – it is now trading at $4,335 and has clearly broken ‘OUT’ of that triangle chart pattern that we discussed earlier this week – surging higher about to challenge the all time high of $4,380. And all this tells us is that gold traders are NOT buying the message out of the FED – they are betting rates have room to move lower.

Bitcoin is trading at $92,000 and Ethereum is trading at $3,240.

The VIX kissed resistance at 17.13 and failed and is now back to the complete complacency zone 15.25 and that suggests stocks have room to go higher.

But futures are not so sure…. This morning Dow futures are +90, S&P -10, Nasdaq -150, while the Russell is +6. Again notice the theme – money rotating out of tech and into the broader market.

European markets are slightly higher across the board.

The S&P closed at 6,901 up 14 points on the day…We are now 19 pts away from piercing the 2025 intraday high….futures are suggesting that the S&P will churn a bit lower on the open – the question is – Will that change once the bell rings? IF it does and we kiss and penetrate 6920 – then watch as the algo’s will go into buy mode as they race to take the S&P to 7000 – which I think would be swift.

Christmas eggnog cheesecake

This is soooo good. This is my favorite cheesecake recipe with a ‘twist’ for Christmas. It’s always a crowd pleaser and so easy to make. This recipe once again reminds me of my grandmother – It will bring a smile to your face and will quickly become a staple on your desert table along with the Italian pastries – cannoli’s, Profiteroles, sfogliatella, parigini, pasticiotto. This Christmas version has a twist - read on.

Preheat oven to 375 degrees.

Crust – 1 1/4 cup flour, 1 1/4 tsp of baking powder, 1/4 c sugar, 1 stick of melted butter, 1 beaten egg, 1 tsp vanilla.

Put all ingredients into a deep-dish pie plate and mix directly with a fork. Once formed – using the back of a tablespoon – gently spread it out into the plate and up the edges.

Filling:16 oz of cream cheese, 2 beaten eggs, 1 c sugar, 1 tablespoon flour, 1 1/4 c eggnog (use whole milk if you don’t what the Christmas version), 1 tsp vanilla.

Combine all ingredients into a blender and mix well. Now pour the mixture directly into the crust – sprinkle with cinnamon and place in the middle rack in oven. Bake for 35 mins…Remove – it will appear shaky… no need to worry… as it cools it becomes solid and creamy. Refrigerate and when ready serve – you can serve it just plain or with any fruit topping you like.