Rates, Rallies, and the Tech Takedown

Fresh news and strategies for traders. SPY Trader episode #1434. The market experienced intense volatility, culminating in a massive Friday rally after the New York Fed signaled a potential rate cut. This dovish pivot battles against intense valuation scrutiny in highgrowth technology sectors, prompting traders to look towards defensive rotation and prorate cut cyclicals.

Episode Transcript

(00:00):
Welcome back to Spy Trader .
I'm your host , Rusty Spoons , ready to break down a truly wild week on Wall Street .
It's 5 am on Saturday , November 22nd , 2025 , Pacific , and if you’re like me , you’re trying to make sense of the whiplash we just experienced .
The past week was defined by deep selloffs followed by one of the strongest rallies we've seen in months , all thanks to some carefully chosen words from the Federal Reserve .

(00:27):
Let’s start with the weekly scorecard .
Despite a massive bounce on Friday , the major indices still closed the week in the red , showing just how intense the midweek selling pressure was .
The techheavy Nasdaq Composite was the worst performer , tumbling approximately 2.5% to 3.2% for the week due to concerns about high valuations .

(00:51):
The S&P 500 also posted a weekly loss of around 2.0% .
The primary macro catalyst that rescued the market on Friday was New York Fed President John Williams signaling he could support an additional rate cut in the near term .
This dovish commentary immediately boosted the marketimplied probability of a December rate cut to nearly 70% , throwing fuel onto the fire .

(01:18):
On the economic front , the data was mixed but generally positive .
The S&P Global flash index showed the US economy growing at the fastest pace in four months , driven by the services sector hitting a fourmonth high .
However , manufacturing growth slowed slightly , and earlier in the week , a mixed jobs report initially reinforced the view that rates would remain on hold , which actually contributed to Thursday’s selloff .

(01:47):
We saw massive divergence among sectors .
Technology and Communication Services were the clear underperformers , with the Technology Select Sector SPDR Fund or XLK declining 3.2% on Thursday alone .
This volatility hit even the biggest winners .
Nvidia , for instance , reported blockbuster Q3 earnings and rosy guidance , citing accelerating compute demand and ‘ Blackwell sales off the charts .

(02:17):
’ Yet , the stock sold off 3.2% on Thursday as investors questioned the CapEx sustainability and ROI for the hyperscalers buying all those chips .
That AI valuation bubble concern is real .
Meanwhile , Health Care showed significant relative strength , up 5% for the month of November , buoyed by companies like Medtronic , which reported strong Q2 results .

Consumer discretionary names struggled (02:43):
Home Depot missed expectations due to consumer uncertainty and housing pressure , and Target saw comparable sales decline driven by continued softness in its discretionary portfolio .
Our core analysis centers on the battle between the dovish Fed pivot and the intense scrutiny on AI valuations .

(03:07):
Friday’s rally proves the market is starving for lower interest rates , which benefits longduration , highmultiple assets like those found in the Invesco QQQ Trust .
But the fact that Technology sold off hard despite Nvidia's stellar earnings means investors are now shifting focus from pure revenue growth to the profitability of the ecosystem .

(03:28):
High volatility in MegaCap Tech is now the new normal .
So , how do we trade this environment ?
First , defensive rotation is key .
The outperformance of the Health Care sector , supported by positive company news from Medtronic , suggests shifting from highvaluation tech to stable names .
Look at the Health Care Select Sector SPDR Fund , XLV .

(03:52):
Second , if the dovish Fed persists , we can look opportunistically at ProRate Cut Cyclicals .
Financials , tracked by the Financial Select Sector SPDR Fund , XLF , should benefit from easing policy .
Also , The Home Depot , HD , which was hit by housing pressure , could stage a rebound if lower rates stimulate mortgage activity .

(04:15):
Third , maintain caution in Technology .
For core exposure , hold the XLK , but acknowledge the high risk .
Tactical traders may use the QQQ for quick plays , but be highly selective .
Fourth , given the increased probability of a December rate cut , longduration bonds should benefit .

(04:35):
Consider the iShares 20 Year Treasury Bond ETF , TLT , which is sensitive to longterm rate movements .
Finally , for longterm growth , always maintain broad market exposure through instruments like the Vanguard Total Stock Market ETF , VTI , or the iShares CORE S&P 500 ETF , IVV , to capture diversification and reduce singlesector risk .

(05:00):
That’s all for this edition of Spy Trader .
Stay nimble , stay safe , and we'll catch you next time .