Defensive Playbook: Trading Uncertainty and Rotation

Fresh news and strategies for traders. SPY Trader episode #1422. The market pulls back from recent highs amid macroeconomic uncertainty and valuation fears, prompting a major sector rotation. We outline strategic moves, shifting from highflying tech to defensive sectors like Financials and Energy, and recommend balanced portfolio diversification.

Episode Transcript

(00:00):
Welcome back to Spy Trader !
I'm your host , Barry Cashflow , and it's 5 am on Monday , November 10th , 2025 , Pacific time .
We are starting the week in a mood of cautious pullback , retreating from the late October highs , and it’s time to navigate this turbulence .
The focus today is definitely shifting from highflying growth to defensive stability , driven by mixed economic signals and high valuation fears .

(00:28):
The S&P 500 has experienced a weekly decline , breaking a threeweek winning streak , and is sitting about 2.4% below its recent peak .
The Nasdaq Composite , led by Technology , is leading the drawdown , showing significant pressure on instruments like the Invesco QQQ Trust .
This retreat comes despite a broadly stellar Q3 earnings season , where a whopping 82% of S&P 500 companies beat analyst expectations .

(00:59):
So , what is pushing us back ?

Two big factors (01:01):
macroeconomic uncertainty and rotation .
First , the prolonged US Federal Government shutdown has severely limited the release of key official economic data , spiking investor uncertainty .
Simultaneously , we have mixed labor signals — modest private payroll increases countered by a significant soaring of planned layoffs reported by US employers .

(01:27):
The market is also grappling with what many are calling an ' AI bubble , ' especially given the S&P 500 is up 35% from its low for the year , making megacap tech stocks vulnerable to profittaking .
This has led to a clear sector rotation .
Technology , tracked by the Technology Select Sector SPDR Fund or XLK , has lagged hard , falling about 6% recently .

(01:53):
Even giants like Nvidia and Microsoft have felt the sting of caution .
Conversely , money is moving into traditional value and defensive sectors .
Energy is a leader , benefiting from strong Q3 earnings , especially Exxon Mobil , which saw its price target raised citing projected revenue growth .
Financials ( XLF ) and Utilities ( XLU ) are also showing relative strength .

(02:19):
Real Estate ( VNQ ) is gaining ground , largely because the Federal Reserve resumed rate cuts in September , easing pressure on borrowing costs for REITs .
So , what’s the trade for this environment ?
We need a balanced and selective strategy .
Given the market rotation , we focus on value and defense .

(02:40):
I recommend initiating or adding to positions in the Financial Select Sector SPDR Fund ( XLF ) , capitalizing on financials outperformance and healthy economic outlooks following Fed rate cuts .
For specific stock plays grounded in sector strength , look at Exxon Mobil ( XOM ) , given the positive analyst targets and dividend stability .

(03:04):
For investors concerned about general valuation , look toward broad diversification .
Instead of the concentrated QQQ , consider the Vanguard Total Stock Market ETF ( VTI ) or the iShares CORE S&P 500 ETF ( IVV ) .
These capture the necessary exposure to the ' Magnificent Seven' AI story but temper concentration risk .

(03:29):
Finally , don't abandon growth , but be surgical .
Companies with recent positive catalysts like Broadcom ( AVGO ) , following new AI partnerships , or Palantir Technologies ( PLTR ) , which is benefiting from commercial AI adoption , are where you want to selectively dollarcost average into dips .

(03:50):
Given the political gridlock and uncertain macro data , always maintain a core fixed income position for stability , such as the iShares Core U.S.
Aggregate Bond ETF ( AGG ) , which stands to appreciate if yields drop further .
That’s all the time we have for this edition of Spy Trader .
Trade smart and I’ll catch you next time !