Quick Market Update
Enjoy the Turkey 🦃
Big Picture: Still Up, But Late‑Cycle Risk
Into year-end, the market still leans bullish, but we’re clearly in a late‑cycle phase with more leverage and more hidden risk. The tape is being pushed around by extreme bets in both directions, so moves can be sharp and emotional rather than calm and steady.
Positioning: Leverage Everywhere
On one side you’ve got big 3x short S&P trades betting on a drop, and on the other side you’ve got aggressive “buy‑the‑dip” money piling into levered long ETFs. At the same time, investors are holding very little cash, which means there isn’t a huge dry‑powder cushion if things really roll over. Chart from Subutrade here helps tell the story.
Seasonality & Breadth: Year‑End Tailwind
Seasonal stats and breadth still favor a grind higher into December. The S&P has been holding key moving averages and this recent sell off can give some fuel into year end (to the upside)
Sector Rotation: Quiet Move to Defense
Under the surface, big money has been slowly shifting out of mega‑cap tech and consumer names and into more defensive spots like healthcare, biotech, utilities, and oil services. That kind of rotation is typical late in the cycle and often shows that smart money is getting more cautious even if the index headline looks fine.
GOOG Strength
Google has had a huge run and is now stretched above its long‑term trend, so the “easy money” there is probably done for a while and choppy consolidation is more likely.
I added a lotto put today on GOOG, it is likely cooked based off the overnight move (lotto thankfully) but might be a good setup at the open. Generally best to avoid shorting strength.
One issue is the cash level, see chart below. Another potential late cycle clue.
Crypto:
Bitcoin has just gone through one of the fastest clear‑outs of small ETF holders, pushing price under the average entry of those buyers and likely shaking out a lot of weak hands. I am leaning the top is in this cycle but as my weekend crypto update pointed out, we could have 15-20% bounce into Christmas.
Trade Updates
