FED lagging badly, should cut rate and signify intentions to cut again in 2026. 

POWELL should quietly leave ASAP, 

LEE (FUNDSTRAT) is very bullish: 

Lee expects the S&P 500 will close out the year between 7,000 to 7,300 points. He pointed to data going back to 1950 suggesting that when stocks finish flat or down in November, then in all four instances you have a stronger December performance, with a median gain of 3.5%. 

There’s six other reasons why he believes stocks will gain in December. First is because the Fed’s likely going to cut interest rates in December. Futures prices imply that there’s an 87% chance of a quarter-percentage point rate cut at next week’s meeting, up from 62% a month ago, according to the CME’s FedWatch tool. 

Lee pointed out that the Fed is done with shrinking its balance sheet, also known as quantitative tightening. “That’s not only positive but quite dovish for stocks,” Lee said.   

Second, the U.S. economy remains healthy and ISM continues to come below 50, suggesting that there is still pent up demand bubbling beneath the surface.

Fresh economic data released this week showed that the labor market strength deteriorated in November. Private employers lost 32,000 jobs, according to ADP, which was below expectations for a 40,000 increase. Meanwhile, on the inflation front, the Fed’s preferred inflation gauge rose 0.3% from a month ago, while the core number increased 0.2%. Both were in line with expectations. 

Third, the government shutdown is now over, restoring visibility after a blackout period for economic data. 

Fourth, many investors were on the offside during the earlier part of November when stocks were lagging. As it is, 2025 is turning out to be the worst year for fund manager performance with 78% trailing their benchmarks. That’s why Lee thinks there’s going to be “performance chasing” as the year wraps up.

Fifth, equities got oversold in November, with RSI falling to the lowest level since April’s Liberation Day-driven low when stocks bottomed. 

Sixth, Lee pointed to strong December seasonals for why investors should expect a rally by the year-end. 

Head of Technical Strategy Mark Newton has a similar view. While all-time highs from this past October could serve as resistance initially heading into the FOMC meeting, he acknowledged that it has been an excellent recovery after a difficult November. 

He likes that various measures of broad-based market action based on the equal-weighted S&P 500, along with industrials, financials, and discretionary are all helping stocks “act a bit better.”

• 12/9 6:00 AM ET: Nov Small Business Optimism Survey
• 12/9 10:00 AM ET: Oct JOLTS Job Openings
• 12/10 8:30 AM ET: 3Q ECI QoQ
• 12/10 2:00 PM ET: Dec FOMC Decision

The  turn probability summation system values for turns in or acceleration of the current trend in the DJIA are relatively high every day this coming week with the highest values on Wednesday and Thursday December 10th and 11th.

Last week the Monday afternoon and Tuesday the 1st and 2nd turn window seen in the marketwatch.com plot below caught the low for the week.  As always a determination of the value of the Friday the 5th turn window will have to await DJIA action early this week.

The equity put/call ratio plot that I showed in last week's turn post updated below continues to signal the increased likelihood of at least a brief turn down in the DJIA.

Not one of the cotton picking rainbow of colors interior trend lines that I showed last week worked.  The DJIA up trend was just too strong.  Instead of overhead resistance the last remaining interior trend line now looks like support.

And finally the plot of the 10 year Treasury yield below appears to be developing either a rounded bottom or reverse head and shoulders pattern both of which point to higher rates.  If either of these chart pattern's are correct, bond traders will look askance on the widely anticipated plan by the Fed to crank-up the money pump this coming Wednesday by lowering the Fed funds rate or by increasing debt security purchases.  Given the turn risk window associated with the Fed meeting, something interesting market-wise can be expected probably resulting from the Fed action or maybe the bond market's response to what the Fed does or says.

Regards,

Douglas

Concurrently, U.S. margin debt has spiked by 45.2% year-over-year to an unprecedented $1.18 trillion in October 2025. This rapid increase in borrowed funds for stock purchases is a pace previously observed during the 2000 dot-com bubble, raising concerns about market fragility and the potential for magnified losses if the market experiences a downturn.

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It has the potential to make or break the data center, AI, OpenAI trade. The next crypto miners or the Delphi oracle?

It's only EW, lots of other potentials.