Things You Need to Know
- Stocks pullback – its rotation, not exit.
- Oil and gold both await the FED.
- FED blackout begins today – markets expect a cut.
- Only 2 weeks left before we shift into holiday mode.
- Feast of the 7 Fishes – Try the Linguine and Clams
So November ended on a plus tick and December starts on a minus tick…..Remember what I said – the Thanksgiving week – is two things – it was a holiday shortened week and it was a low volume week – so much of the trading was done by algos trading with algos – as many participants were away from their desks allowing moves to be exaggerated and amplified…and so, they took stocks higher. Now, remember they pushed the S&P down to the intermediate term trendline (6551) in mid – November – where it found support and then last week they took it right back up thru the short term trendline to end the month at 6849 – a 4.5% move in 4 days.
And so, yesterday stocks fell – HELLO??? Why is anyone surprised and why does the media think it’s a disaster? It is not. By the end of the day – the Dow gave back 430 pts or 0.9%, the S&P down 36 pts or 0.5%, the Nasdaq lost 90 pts or 0.4%, the Russell lost 31 pts or 1.25%, the Transports bucked the trend – rising 3 pts, the Equal Weight S&P gave up 54 pts or 0.7% while the Mag 7 lost 34 pts or 0.1%.
Now here’s the funny part — the media tried to frame it as a risk-off day, with “the riskier corners of the market getting hit.” Really? Because the sectors that took it on the chin were Utilities (–2.3%), Industrials (–1.5%), and Healthcare (–1.5%) and Real Estate (-1.4%). Hardly the wild-west, high-octane corners of the market.
If Tech and AI had gotten smashed, then you could make the risk-off argument. But that’s not what happened. In fact, Tech held up just fine — the XLK actually closed UP 0.05%. Nothing to write home about, but it wasn’t down.
You know what was under pressure? Bitcoin and Ethereum – now that’s the “riskier corners of the market.” Bitcoin lost 5.2% or about $4,700, while Ethereum dropped 7.6% or roughly $230. And here’s a little secret — nearly $1 billion of leveraged crypto positions got liquidated, and that forced another round of algorithmic selling across the entire crypto complex. That’s where the real stress was… not in Utilities, Industrials, Healthcare, or Real Estate.
So why did the defensives get sold? Simple. It was rotation – a mechanical, end-of-month / start-of-month rebalancing move.
Layer onto that the fact that yields backed up — bonds got hit yesterday. TLT fell 1.6%, TLH lost 1.4%, sending the 10-year yield up 6 bps to end the day at 4.09%. The 30-year rose 7 bps to 4.73%.
And that immediately put pressure on all of those sectors.
Why? Because Utilities, Healthcare, and Real Estate all act like bond proxies — high-duration cash flows that get discounted more aggressively when rates move up.
Industrials, meanwhile, have been quiet outperformers all year — up nearly 17% YTD going into yesterday. Within that, Aerospace & Defense (up 37% YTD) got punched right in the face — down 2.6% yesterday — and that alone explains nearly 40% of the decline in the Industrials sector.
Bottom line?
This wasn’t “risk-off.” It was rotation and some start-of-month rebalancing as yields rose. Nothing more, nothing less. Let’s not get dramatic!
Oil — which had traded down to $57 earlier last week — also rallied back into the weekend, and this morning is up 5 cents at $59.40. It continues to sit below trendline resistance at $59.90, and the broader pattern still suggests a clear downtrend.
But this morning we learned that OPEC+ is pausing production increases for the first quarter of 2026 as they try to manage the looming supply glut expected in the new year. That announcement will almost certainly draw oil traders back in, pushing crude a bit higher as they play the classic supply/demand game.
That said, if they do chase it higher, my sense is that intermediate resistance at $61.38 should offer plenty of headwinds — at least for now.
Gold – down from its all-time high at $4,380 – has found support along the short-term trendline, now sitting at $4,040. We’ve tested that trendline and held, only to march right back up and retest the mid-November high at $4,250… and fail.
This morning, gold is trading down $40 at $4,190, leaving it comfortably sandwiched between trendline support below and the mid-November high above. The next decisive move will be entirely dependent on what comes out of the FED next week.
And speaking of next week — today the FOMC blackout window begins. That means no commentary, no hints, no “trial balloons” from any voting FOMC member. They are officially behind the iron curtain.
But we may still hear from the usual suspects: non-voting regional Fed presidents, the WSJ’s well-connected Fed whisperer (Nicky T), or our friends at Goldman, especially if the tone inside the committee is shifting or if policymakers are considering something different from the current market expectation.
And just to remind you — the market is expecting a 25-bps rate cut. Fed fund futures are now pricing in a 95% chance that JJ delivers.
If he doesn’t? There will be hell to pay. The algos will go ballistic, buyers will step aside, and stocks will fall. But between you and me? THAT is not happening. Now what happens in 2026? That’s going to be the question…. will JJ hint more rate cuts in January, February and March or will he finally say – ‘stop the whining’!
Now – there will be plenty of macro data to consider between now and next week. Today brings us a bunch of data points from September (which I think are now useless) – but look for Housing Starts, Retail Inventories, Building Permits, Durable Goods Orders, Construction Spending, Factory Orders, New Home Sales. Later in the week we’ll get the ADP employment change that is expected to show 5k new jobs created in November. We will also get US Services PMI for November and that is expected to be 55 – well into the expansion zone. ISM Services PMI – at 52 – also well into the expansion zone.
We are algo getting the September PCE Price Index – the FED’s favored inflation gauge for September that is expected to show inflation remains sticky at +0.3% m/m and +2.8% y/y. Well below levels seen under the Bidens, but still above the FED’s target. Again though, I think at this point – it’s useless…but that’s me.
This morning, US futures are a bit higher: the Dow +60, S&P +17, Nasdaq +95, and the Russell +15. Yesterday’s so-called “risk off” mentality has already morphed into today’s “risk on” mentality.
Look — we’re now in the final trading month of the year. In reality, we’ve got maybe two weeks of true liquidity left. After next week’s FED announcement, volumes will start to fade fast. Europe essentially goes dark after December 15th, and US markets typically quiet down as we move toward month-end and the holidays.
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. Every House seat is up for grabs. The consensus right now:
Dems are expected to take back the House, Republicans are expected to hold the Senate, …which means gridlock for the next two years. And honestly? The market is fine with gridlock — it removes legislative uncertainty.
But until we get that clarity? Expect noise, volatility, and plenty of commotion along the way. Look to balance your portfolio next year with defensive, stable, quality names while taking advantage of ‘growthy names on any significant pullback.
European markets are higher this morning…. Spain in the lead – up 1.2%, the UK is up 0.4%…
The S&P closed at 6,812 – down 36 pts. Expect lots of churn over the next month…. Remember asset managers are looking to protect all their gains thru December 31st…. 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.
Call me at 561-931-0190 – to give you a no obligation portfolio review. Let me help you assess the risk of the portfolio vs. the risk you are willing to take.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Its December and its time to feature the Feast of the 7 Fishes – a treasured Italian tradition – at least up in Boston…. It was and remains one of the greatest nights of the year.
The tradition comes from La Vigilia di Natale — the Christmas Eve “Vigil.”
In Italy, Christmas Eve was historically a day of abstinence from meat.
So, families prepared a seafood feast instead — and over time, it became a signature celebration.
Now, why seven fishes? One explanation is Catholic Symbolism: The Number 7
In Catholic tradition, 7 is everywhere: 7 Sacraments, 7 Virtues, 7 Deadly Sins, 7 Days of Creation, 7 Joys and Sorrows of Mary – so, serving seven dishes symbolized spiritual completeness. Whatever the reason – it’s a great night.
Try the Linguine and Clams.
Here is my YouTube video of the dish.
For this you need – 2 doz clams – wash thoroughly to remove any sand from the shell. You also need some fresh minced clams from the fish store for more flavor. Olive oil, plenty of garlic, onions, white wine, clam juice s&p and of course the linguine.
In a saucepan – heat olive oil next add sliced and crushed garlic, then sliced onion – sauté around until soft – 10 mins…
Now add clams, S&P, reduce heat to med… allow the clams to open. (Never use a clam that is open before you cook it…capisce?). There should be plenty of juice – If you need more juice – feel free to add a bottle of clam juice. Now add the wine, season with s&p and then simmer.
Bring a pot of salted water to a rolling boil –
Add the linguine – cook for 8 / 10 mins…. or until aldente. Strain – always reserving a mugful of water…..return the pasta to the pot – add back 1/2 mug of water to re-moisten. Toss – wait a min or two and then add the clams and the clam sauce….re-toss and serve immediately in warmed bowls. You should have grated Parmegina or Romano cheese available on the table for your guests – although some Italians would cringe at the thought of putting cheese on a fish dish… I do not.. It is delicious!
Enjoy this dish with Sliced Italian garlic bread – and a glass of white wine. Nothing fruity…..I always like a Pinot Grigio with this dish as I find it complements the sweet taste of the clams. This dish should take you no more than 40 mins…start to finish.
Buon Appetito!