1. We believe there is a 55-60% chance that last Friday’s index pullback lows are the low for this move. This is not a high conviction view as of yet.
If SPX closes over 6800 this week and QQQ closes over 615, we would raise the odds to 70-75%. Both would be a close above last Thursday’s opening gap highs.
NDX hit the most oversold reading of 2025, last Thursday. We informed our subscribers pre-market on Friday, and told them to expect an oversold bounce/reversal, which we have seen so far.
We believe that markets pulled back recently following big tech earnings, due to being overbought. The crypto selloff on October 10 also had a ripple effect to high beta stocks, nuclear and tech.
2. Our top ranked sector currently is healthcare, including pharma and biotech.
We have long positions in Eli Lilly (LLY), HCA Inc. (HCA) and the SPDR Biotech ETF (XBI).
We believe that all are buyable here and or on pullbacks.
The Healthcare SPDR ETF (XLV) is the top performing S&P 500 sector over the last 30 days, +6.22% and 90 days, +1.3.51%.
3. We remain bullish on the tech sector and AI.
Alphabet (GOOG), Broadcom (AVGO) and Apple (AAPL) are among best ideas there, as well as Micron (MU).
GOOG TPU’s have become a viable rival for Nvidia (NVDA) and we would look to have exposure in GOOG and/or AVGO.
(WE are long AVGO and NVDA currently.
4. We expect a 25-basis point rate cut from the Fed on 12/10.