Tech Tumble: Why Value is Winning Now

Fresh news and strategies for traders. SPY Trader episode #1455. The market experienced a massive rotation out of technology stocks, driven by disappointing forecasts from giants like Broadcom and Oracle, and into classic value sectors like Financials and Industrials. This shift, supported by a recent Fed rate cut, saw the Nasdaq drop significantly while the Dow surged. We analyze the implications of this volatility and outline strategies for positioning in financials (XLF) and diversified tech (QQQ).

Episode Transcript

(00:00):
Welcome back to Spy Trader , the only podcast that makes sense of your weekly portfolio chaos .
I'm your host , Skip Ticker , and it's 5 am on Saturday , December 13th , 2025 , Pacific .
We just wrapped up one of the most turbulent but telling weeks we've seen all year , characterized by a massive rotation out of highflying technology and into classic value stocks .

(00:25):
Let's dive into what happened and where we should be positioning ourselves for the coming week .
The biggest takeaway this week is the sharp divergence across the major indices .
The S&P 500 managed to gain about 0.5% for the week , but Friday was tough , seeing its worst day in three weeks , falling 1.1% .

(00:47):
The Nasdaq Composite was the clear loser , dragged down by tech earnings , dropping a massive 1.7% just on Friday .
The Dow Jones Industrial Average , however , was the champion , set to gain around 1.6% for the week , highlighting the sudden strength of industrial and cyclical names .

(01:08):
This rotation started earlier in the week when the Federal Reserve cut its benchmark rate by a quarter point to the 3.5%3.75% range .
This anticipated easing cycle pushed the S&P and Dow to record highs midweek , but the tech sector just couldn't sustain the momentum .
This wasn't just profittaking ; it was a fundamental shift .

(01:31):
We saw capital flee Technology , which was down 2.18% for the week , and rush into sectors like Basic Materials , which soared 3.06% , and Financial Services , which was up 2.38% .
This means investors are suddenly favoring cyclical stocks like Goldman Sachs and JPMorgan Chase that benefit from an easing Fed and a solid economic outlook .

(01:57):
The big triggers for the tech collapse came from disappointing forecasts .
Broadcom , ticker AVGO , plunged 11.4% on Friday after concerns over margin pressure , despite beating earnings .
Oracle , ORCL , suffered a similar fate , falling nearly 11% earlier in the week due to disclosing a huge , 15 billion higherthanprojected increase in capital expenditures for AI infrastructure , raising doubts about nearterm profitability .

(02:29):
Even the AI darling , Nvidia , fell 3.3% in sympathy on Friday .
Adding pressure , the 10year Treasury note yield climbed back up near 4.19% , making those longduration growth stock valuations look even pricier .
So , where do we go from here ?
The market is undergoing a necessary correction , but the economic backdrop remains firm due to the Fed’s easing .

(02:54):
Our strategy should reflect this rotation .

First , capitalize on the Value trade (02:57):
Consider increasing exposure to Financial Select Sector SPDR Fund , or XLF .
Financials are primary beneficiaries of this rotation and the stability offered by the Fed's stance .
Second , for those looking to selectively enter Tech after the drop , use a diversified approach like the Invesco QQQ Trust .

(03:21):
The broad selloff might offer a more attractive entry point if you believe the longterm AI thesis holds , but diversification is key right now .
Third , don't ignore stability .
The Fed's three rate cuts this year support bonds , so maintaining holdings in something like the Vanguard Total Bond Market ETF , BND , provides necessary ballast against equity volatility .

Finally , remember that strong fundamentals still matter (03:45):
Look at Lululemon Athletica , LULU , which jumped nearly 10% on Friday after beating profit and revenue expectations .
Be cautious of overconcentration in volatile single AI names like Broadcom and Oracle until we get more clarity on those capital expenditure concerns .

(04:09):
That’s all the time we have for this edition of Spy Trader .
Stay safe out there , and we'll catch you next time !