Goldilocks Market: The Tech Trade Reignites

Fresh news and strategies for traders. SPY Trader episode #1461. Indices snap losing streak as CPI softens, fueling 2026 rate cut hopes. We analyze the massive AI surge led by Micron, the danger of the 40 Shiller P/E, and tactical trades in QQQ, SCHD, and TLT.

Episode Transcript

(00:00):
Welcome back to Spy Trader .
I'm your host , Barry Cashflow , and it's 5 am on Friday , December 19th , 2025 , Pacific .
We've got a fantastic end to the week shaping up !
The major indices just snapped that ugly fourday losing streak , fueled by cooling inflation data and a massive surge back into AI technology stocks .

The market is celebrating what looks like a potential Goldilocks scenario (00:24):
inflation is easing , the labor market is slowing , and tech earnings are blowing expectations out of the water .
This rebound was led by the Nasdaq Composite , surging 1.38% , while the S&P 500 gained 0.79% .

(00:46):
The Dow registered more modest gains of 0.14% .
It was a clear rotation back into growth , with Technology and Consumer Discretionary leading the rally , while sectors like Financials and Energy lagged .
The biggest catalyst yesterday was macroeconomic data .
The November CPI report came in softer than expected , with Headline CPI at 2.7% and Core CPI easing to 2.6% .

(01:16):
This data immediately boosted confidence that the Federal Reserve will continue easing monetary policy in 2026 .
This ratecut optimism was further supported by the weaker labor market report , showing just 64,000 jobs added in November and unemployment rising to 4.6% , the highest in almost four years .

(01:39):
On the company front , we saw massive , stockspecific moves .
Micron Technology was the star of the show , jumping 10.2% after delivering a blowout forecast .
This strong performance , driven by tightening supply for highbandwidth memory used in AI servers , immediately reignited enthusiasm across the entire tech complex .

(02:02):
Elsewhere , Oracle popped 5.4% after hours on news of a US jointventure deal with TikTok .
Conversely , Nike plunged 10.7% after earnings , largely due to ongoing pressure from declining sales in Greater China and negative tariff impacts .
This combination of easing macro pressure and strong , AIdriven corporate growth creates a powerful riskon environment .

But here is the critical insight (02:29):
the S&P 500 is historically expensive .
The Shiller P/E ratio sits at 40.22 , a level only exceeded during the dotcom bubble .
This means market gains are highly concentrated , and investors must be selective .
For our trading recommendations , we're focusing on three themes .

(02:52):
First , stick with the momentum in the AI growth trade .
Cooling inflation is mathematically great for highgrowth tech stocks .
We recommend overweighting exposure to instruments like the Invesco QQQ Trust or the Technology Select Sector SPDR Fund , XLK .
Specifically , Micron Technology , after that 10.2% surge , is a prime example of a core momentum investment in the AI infrastructure space .

(03:21):
Second , given that historically high 40.22 P/E ratio on the broad market , we must maintain a defensive hedge .
Use selective value and income plays to provide stability .
Look at the Schwab U.S.
Dividend Equity ETF , SCHD , which provides exposure to highquality , stable companies like Merck or Amgen at a much lower valuation than the S&P 500 itself .

(03:47):
Third , tactically , the softer CPI data strongly supports buying longduration bonds .
We recommend the iShares 20 Year Treasury Bond ETF , TLT .
If the Fed continues easing in 2026 , TLT’s price should appreciate significantly as yields fall .
Remember to manage your stockspecific risk , like the 10.7% plunge we saw in Nike on geopolitical exposure and China sales weakness .

(04:16):
That's it for this edition of Spy Trader .
I'm Barry Cashflow , and I'll catch you on the next trade .