Good morning investors,
Friday's 500-point Dow surge after NY Fed President Williams hinted at December cuts marked the exhaustion bottom I've been anticipating. Markets held critical support levels despite Thursday's Nvidia whiplash, and now we enter Thanksgiving week with four bold calls: Bitcoin back to $100K, Russell 2000 to new highs, December Fed cut, and S&P above 6,800 by year-end. The shortened holiday week often marks inflection points as institutional selling pressure eases and year-end positioning begins.
Opening Bell: Building on Friday's Reversal
S&P ($SPY ( ▲ 0.23% )) futures rise 0.5% with Nasdaq ($QQQ ( ▼ 0.32% )) futures up 0.8% while Dow ($DIA ( ▲ 1.36% )) futures add 82 points. The momentum from Friday's reversal continues as December rate cut odds jumped from under 40% to over 70% on Williams' comments alone. Markets close Thursday for Thanksgiving and trade half-day Friday, typically reducing selling pressure.
Alibaba ($BABA ( ▼ 1.21% )) surges 5% in Hong Kong after its Qwen AI app hit 10 million downloads in a week, validating AI adoption despite market skepticism. Meta ($META ( ▲ 0.4% )) remains oversold at 19.8x forward P/E after November's 15% decline on capex concerns, creating opportunity in quality names abandoned during indiscriminate selling.
My Four Bold Year-End Calls
This weekend I laid out four predictions for the final six weeks of 2025:
Bitcoin returns to $100K - Friday's bounce from $80K showed exhaustion and potentially a spring board to regain some of the losses of recent weeks.
Russell 2000 hits all-time highs - Small caps have the potential to breakout of multi year downtrend as Fed easing resumes.
Fed cuts in December - Williams' comments confirm doves haven't surrendered and market may have over done the no cut in December narrative.
S&P 500 reclaims 6,800 - Year-end rally tradition plus oversold conditions.
These aren't moonshots but calculated probabilities based on sentiment extremes, technical support holds, and seasonal patterns. November's violence created the setup December needs.
Meta: The Overdone Selloff
Meta's 15% November decline on raised capex guidance to $70-72 billion represents classic good company/bad stock dynamics. The market punished investment in future growth despite solid current numbers. At 19.8x forward earnings, Meta trades at recession valuations while generating massive cash flows.
The 2026 warning of "notably higher" spending spooked momentum chasers during a period of "AI Bubble" fears, but misses the point, Meta invests because returns justify it. This knee-jerk selling of profitable tech investing in AI infrastructure creates opportunity for patient capital.
Bottoming Process Underway
Friday's reversal displayed textbook bottoming characteristics. Major indexes held must-hold support despite Thursday's $1.9 trillion intraday swing. Bitcoin flushed to $80K then bounced as leverage cleared. Fear peaked with the VIX near May highs while good news got sold.
Corrections end through seller exhaustion, not clarity. We may retest Friday's lows, as bottoms rarely happen in straight lines, but the violence of Thursday's reversal despite Nvidia's beat marked peak capitulation. Now we wait to see if Friday was the low or if one more flush remains.
Tuesday's Data Deluge
The shutdown backlog delivers critical data Tuesday before markets thin for Thanksgiving. September retail sales and PPI both hit alongside November consumer confidence. After six weeks of data darkness, markets finally get visibility on inflation and consumption trends.
Best Buy, Kohl's, and Dick's Sporting Goods report Tuesday, providing real-time holiday shopping intelligence. Alibaba and Dell earnings offer tech health checks beyond the Magnificent Seven. This concentrated information dump could drive outsized moves in thin holiday trading.
Institutional Positioning Tells the Story
Despite November's tech massacre, institutions added $348 billion in Nvidia holdings during Q3. Total institutional ownership of Nvidia and Microsoft surpassed $2 trillion. This disconnect between price action and positioning suggests forced selling rather than fundamental concerns.
The largest tech companies remain extremely profitable while reinvesting billions into real infrastructure.
Final Thought
Markets bottom when fear peaks, not when uncertainty resolves. Thursday's Nvidia whiplash, surging on beats then crashing anyway, marked maximum emotional exhaustion. Friday's 500-point reversal on one Fed comment shows how quickly sentiment shifts when selling pressure exhausts.
My four bold calls aren't random optimism but calculated probabilities. Bitcoin's flush to $80K cleared leverage. Small caps remain coiled after lagging all year. Williams' dovish stance matters more than anonymous hawks in minutes. The S&P holding support at these levels sets up year-end rally dynamics.
This shortened Thanksgiving week often marks turning points as institutional selling subsides and holiday optimism emerges. Volume drops, volatility might spike, but the relentless selling pressure typically eases. Tuesday's data dump provides the catalysts thin markets need for directional moves.
The bottoming process rarely occurs cleanly. We might retest Friday's lows or even break slightly below before the real rally begins. But the ingredients for a year-end surge align: oversold conditions, sentiment extremes, Fed pivot potential, and seasonal strength.
Use this holiday week to position for year-end strength. Meta below $600 looks compelling. Bitcoin's bounce from $80K suggests accumulation beginning. Small caps offer asymmetric upside if Russell breaks out. Quality tech abandoned in November creates opportunity.
The final six weeks of 2025 have rally potential written all over them.
As always, feel free to reach out with questions about navigating these markets.
Best regards,
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.