Tech carries a weak tape again – Broader market says “Proceed with caution”

So, stocks eked out a small gain or did they? Investors, traders and even the algo’s are appearing to remain ‘cautious’ as we move thru the final trading month of the year – leaving us in that ‘tight’ trading range that we have been discussing. At the closing bell – the Dow ended 185 pts higher, the S&P rose by 16 pts, the Nasdaq gained 138 pts, the Russell lost 4 pts, the Transports added 106 pts, the Equal Weight S&P gave up 5 pts while the Mag 7 gained 175 pts.

Now while the S&P ended the day higher – the broader market represented by the Russell and Equal Weight S&P are reminding us that all that glitters may not be gold. Both of those indexes ended the day lower – once again shining a light on the role of BIG tech has on the markets – reminding us that we need a bit more ‘back and forth’ (think churn) before pushing much higher. That broadening out – is actually finding weakness – as evidenced by the Equal Weight S&P and the Russell – which both ended lower – not dramatically, but their weakness does suggest proceeding with caution.

Only 3 of the 11 broad S&P sectors ended higher and those only slightly so…. Tech up 1%, Industrials up 0.9% and Communications ended 0.4% higher. The other 8 sectors ended lower – led by Energy – down 1.3%, Basic Materials – down 0.9%, Utilities – 0.7%, Healthcare down 0.6%, Consumer Staples down 0.6%, Real Estate down 0.25% while Financials and Consumer Discretionary ended down 0.1%.

Down the list we saw weakness in Homebuilders, Retailers, Airlines, Oil & Explorations, Big Pharma to name a few, while what bucked the trend was anything in the tech space – Semi’s up, Growth trade up, Disruptive Tech up, Cyber up, Software up, Quantum Compute up – are you seeing that? Anything tech was mostly higher while the broader market was under a bit of pressure. Which doesn’t mean there are no buyers, it just means buyers are more selective, more patient.

The VIX — the fear index — ended the day lower, down 3.8% at 16.50, once again slipping below all three trendlines. That puts us right back into the “very complacent” zone, a zone that typically sees broad participation across sectors. But that’s not what we saw yesterday, and that’s why my message is simple:

Go ahead and put money to work if you want — just be selective.

Look for names you already own that are trading at a recent discount or look at names on your watchlist that are entering their buy zones. There are always opportunities — you just have to know where to look and follow your discipline. For me that means down 20% or a break in the long term trendline in the names I already own.

Take IONQ for example. I own it. I like it. And yes — full disclosure — I own it at higher prices.

My average is $61.78; I’m down about 24% on the position (last week I was down 38%). For me, adding at ~$46.93 makes sense because:

I’m buying it at a recent discount – down 24%.

The fundamental story HAS NOT changed – Quantum computing is the next step in the AI story.

I’m lowering my cost basis.

It’s down more than 20% and it tested its long-term trendline, failed to hold, and then bounced back.

And just FYI — the drawdown in IONQ isn’t giving me indigestion. It’s not even 2% of the portfolio, so let’s not get dramatic. Capisce?

Now — names like NVDA, AAPL, AMZN, JPM, MSFT, BAC? I own all of those too. But every one of them is well above my average cost, so I am not chasing. Yes, they were all down too, but none of them met my discipline. If they go on sale — real sale — I’ll buy more. Last week, I thought I was going to get the chance - AMZN and MSFT were down low double digits (not 20%+) and both tested their trendlines… and held. And since then, they’ve rallied right back, So, no, I did not buy any more.

Next - Our friend Mikey Burry has now made a new claim – besides his negative view of NVDA and PLTR he is now adding TSLA to his list of ‘ridiculously overvalued’ names and while that did not cause the Mag 7 to fail, it is causing some investors to take a ‘second look’. And while I am not a Burry follower, I am in the camp that some names are stretched (I’ve been saying that for months) so again, all that means is proceed with caution.

Bonds did next to nothing…. TLT and TLH both rose less than 0.1%. The 10-year yield down 1 bps at 4.07% while the 30-year remains steady at 4.73%.

Oil —got punched in the face – falling 1.2% or 73 cts/barrel to end the day at $58.60. It continues to sit below trendline resistance at $59.90, and the broader pattern still suggests a clear downtrend.

Gold –is down $40 from yesterday morning…trading this morning at $4,200- remaining well within the trading range – 4,040/4250. The next real move will be entirely dependent on what comes out of the FED next week.

And Bitcoin & Ethereum? They bounced and ended up rallying fairly strongly into end of day. This morning Bitcoin is trading at $92k up from $85k yesterday and Ethereum is trading at $3,080 up from $2,950. The jury is still out on crypto’s next move – some see it surging higher while others see it collapsing…and that’s what make a market – buyers and sellers….oh and to be clear – Mikey Burry thinks that Bitcoin is worse than the 17^th century Dutch Tulip bubble mania and collapse!
So, add that to the list of his ‘shorts’.

Eco data today includes ADP Employment, which is expected to show a meager 10k increase in jobs. And listen — I’m not betting the ranch on what ADP reports..

We’ll also get the November S&P Services PMI — expected at 55, firmly in expansion territory — and the ISM Services PMI expected around 52, also expansion. All fine. All supportive. But let’s be honest…

The only data point that matters today is the FOMC ‘guidance’. The cut is coming — that’s not the surprise. What will move markets is what JJ says, how he says it, and the tone he uses when he lays out the path forward. That’s the fuse that will ignite the next move…. Will he suggest dovish or hawkish?

On the political side — Trump is expected to announce a new Fed Chair before year-end, and the betting markets have Kevin Hassett as the frontrunner. But remember: his term wouldn’t start until May 2026.

And yes, a lot of people are already assuming that if Hassett gets the nod, we’ll see aggressive rate cuts in the second half of next year.

Let me be very clear — I’m a hard NO on being “aggressive.” I don’t see the need. I don’t see the justification and nothing in the data suggests we’re circling the drain. Not even close. Do you realize that consumers spent $44 billion dollars over the five-day Black Friday/Cyber Monday stretch – that up 7.7% y/y.

If anything, the U.S. economy continues to show durability. Inflation is cooling, unemployment remains at a historic low levels, spending is stable, and supply chains are behaving. I’m sorry, that is not the environment that demands ‘aggressive’ rate cuts.

This morning, US futures are a bit higher: the Dow +75, S&P +12, Nasdaq +30, and the Russell +8.

And we wait for one week from today….. After next week’s FED announcement, volumes will start to fade fast unless of course JJ says something that causes the earth to move…..

My sense? We’ll continue to churn and likely end the year right around current levels — call it 6800/6900 on the S&P.

Could we push to 7000?

Sure — if only because it’s a big, shiny new century mark and traders love round numbers. But tread carefully… because the new year is expected to be volatile and a bit chaotic.

Remember: 2026 is a mid-term election year, and it’s expected to be an all-out, drag-out political brawl.

Look to balance your portfolio next year with defensive, stable, quality names while taking advantage of ‘growthy names on any significant pullback.

The S&P closed at 6,829 – up 16 pts. Expect lots of churn over the next month…. Remember asset managers are looking to protect all their gains thru December 31^st…. think end of marking period! Eco data will become less relevant post the FED meeting…as markets shift into holiday mode. We are now once again above the short-term trendline and remain in the 6730/6930 trading range.

Try Linguine and Lobster Sauce. #2

For this you will need: 2 live lobsters, garlic, crushed tomatoes, onions, basil, s&p.

Start with the basic marinara - Sauté crushed garlic in olive oil on med heat - do not burn the garlic.... now add 2 large slice Spanish onions (or Vidalia if you can get them) and sauté until soft - about 10 mins or so....

At this point add 2 cans of kitchen ready crushed tomatoes - NOT PUREE - if you can’t get kitchen ready crushed - then buy the plum tomatoes in juice and run them through the blender or food processor - leaving a bit chunky....

Bring to boil - season with s&p, and fresh basil - stir. Once it boils - turn heat down to med low and prepare to add the lobsters.

First rule - Always use live lobsters. (Should be like 1 1/2 pounders each). Rinse under cold water - leaving the elastics on the claws so that you do not get clipped.

Once you rinse him/her.... remove the rubber bands and put in sauce claws/face first...now he/she may flap its tail - but that is only for a second or two.... Add second lobster. Stir and make sure that the lobsters are submerged in the sauce and turn heat to simmer.... allow to cook for about 30/45 mins.

Now if you are making this the day before - remove from heat, let cool and then refrigerate. The next day - take out of fridge and let come up to room temp and then slowly re-heat on simmer.... You can just smell the goodness and feel the ocean waves hitting you in the face.....

Bring a pot of salted water to a boil - add the linguine and cook for 8 / 10 mins or until aldente. Strain - always saving a mugful of pasta water - and return to pot.

Add back about 1/4 of the water and stir to re-moisten...do not soak......capisce? Now add 3 ladles of sauce and toss.... Serve immediately - making sure that you have grated Pecorino Romano cheese on the table for your guests. If you like - you can remove the tail/claw meat - shred and add to sauce or you can just present it on a plate for your guests to enjoy....