Easy Money and the Defensive Surge

Fresh news and strategies for traders. SPY Trader episode #1424. Following a Federal Reserve rate cut, the market is undergoing a clear rotation, favoring defensive sectors like Health Care and Real Estate, while megacap tech stocks face pressure and investors pivot toward stability and diversification.

Episode Transcript

(00:00):
Welcome back to Spy Trader .
I’m Barry " The Bull " Baskin , and it’s 5 am on Wednesday , November 12th , 2025 , Pacific time .
We’re tracking a tricky market morning as investors decide where the next dollar goes .
The overall environment is mixed and rotational , with major indices near alltime highs but momentum becoming very selective .

(00:25):
On the macro front , we’ve seen significant relief following progress towards ending the US government shutdown , and crucially , the Federal Reserve cut its benchmark interest rate by 25 basis points , setting the range at 3.75%–4.00% .
This signals easier monetary policy .

(00:47):
But corporate action is pulling us two different ways .
The Dow Jones Industrial Average , represented by DIA , is hitting new records , driven largely by massive strength in Health Care stocks like Merck and Amgen .
Yet , the Nasdaq Composite , tracked by QQQ , is lagging sharply .
Why ?
Megacap tech is suffering .

(01:07):
Nvidia , a key AI enabler , declined after news that SoftBank liquidated its stake .
We also saw Tesla hit a threeyear low in sales in China for October , highlighting major competitive pressures .
This isn't panic , but a clear pivot .
Investors are stepping back from the intense , concentrated AI trade to prioritize stability .

The market is rewarding defensive sectors (01:29):
Health Care Select Sector SPDR Fund , XLV , and Consumer Staples , XLP , are pacing gains .
Even Real Estate , VNQ , is up , benefiting from the expectation of lower borrowing costs following the Fed's rate cut .
This rotation suggests that while corporate fundamentals remain robust — the majority of S&P 500 companies beat Q3 expectations — traders are mindful of potential labor market weakness and are seeking stable earnings .

(02:04):
We have to follow the rotation .
Given this mixed dynamic , our strategy today is Diversification and Rotational Play .
First , shift capital into defensive strength .
Look at the Health Care Select Sector SPDR Fund ( XLV ) , or specifically Amgen and Merck , which are leading the charge .
Second , while the megacap tech trade is cooling , the longterm AI story remains intact .

(02:30):
Maintain core exposure using the Invesco QQQ Trust ( QQQ ) , using these dips as potential buying opportunities , but do not chase .
Third , in a market where leadership is narrow and shifting rapidly , reliable performance comes from broad diversification .
Use the Vanguard Total Stock Market ETF ( VTI ) to capture all market cap sizes .

(02:55):
Finally , with the Fed cutting rates , incomeproducing assets are looking better .
Consider the Vanguard Real Estate ETF ( VNQ ) for income and protection against equity volatility .
Stay nimble , stick to stability , and we'll catch you on the next Spy Trader .