Baked-in-the-cake has been and remains a decent valuation viewpoint as to the high prices of the S&P, which would never have held the high levels if not for the broadening-out we required over the past couple of months. That’s not changed as high valuation for the ‘last generation’ of big-caps continues.An upward surge to start Friday was greeted with a ‘Bear Raid’ … sort of what you might expect from short-sellers (Citadel, do you have that title?) trying in a concerted way to ‘dam’ the flow of funds into the ‘new-generation’ of stocks.The volatility seen Friday is not inconsistent with efforts to ‘tame exuberance’, given the big-caps were of course absurdly expensive and as ‘new-era’ stocks were starting to pull money away from the mega-caps the ‘industry’ primarily is encouraging investors to be in. But for Quantum; is ‘exuberance irrational’?Now that doesn’t mean overexposure isn’t a factor in the speculative growth stocks too; but generally most people at this point probably agree with what we have said for many weeks: trim mega-cap holdings somewhat in favor of the new-generation stocks. It’s not that mega-caps will be ‘dead money’ next year (probably not; but due to have a correction of more significance); but it is to say dips are (for now anyway) being viewed as opportunities to enter, not to exit. Friday ‘tried’ to be just such a session; but end of week; so some waiting.Market X-ray: piercing all this together we anticipate ‘dip or not’ for big S&P, Monday will start the last two days of the year, with action somewhat similar, but any dip yielding to rebound, as the hot stocks of this 4th Quarter will likely alternate but work higher.. since those with larger paper gains in Quantum or AI tickers, presumably want to push those into 2025 at least.Friday’s opening thrust was a rush; and a bit ludicrous in terms of excess. As it was a bit obvious, you had an opportunity for the (desperate?) short-sellers to launch a ‘bear raid’, and they did … by end of day it was mostly unsuccessful and while the start Monday could be a little ‘iffy’; the resolution should be good for most. Given the next day allows 2025 settlement; this may vary tooWe’ve discussed the pros-and-cons of Trump 2.0 often; even before elections (so at this point we won’t); not much changed other than a softer tone towards China it seems like; and a tougher tone in our backyard; essentially Panama; as we also discussed (and understand the objective which isn’t about ‘fees’ to traverse the Isthmus of Panama, as superficially stated). (I had an Army friend stationed in the Canal Zone back then, flying helicopters to fund Colombians fighting the FARC terrorists at the time); who awakened to US Marines landing to oust corrupt Noriega. In the wake; not understanding why we gave the Canal to Panama, would we assume similar corrupt society exists there now. Does it? I really don’t know; but China spread a lot of dough.I can’t divine all of 2025; I am among those who view S&P over-valued; while I do not view specialty stocks as overvalued; though there too exists a degree of concentration, because some investors have been ‘panting’ to get into such stocks; and that is probably fine further-out, but near-term creates excesses. Bottom-line: did the up-down shakeout Friday started a decline before what was suspected to be a setback in big-caps in early January; although this is a 2nd attack on the mega-caps, and again was reversed; for now. That’s sure a question for the month ahead; with the outcome pending. And may overly sort of reliant on the perception of the new Administration; but not so in areas we’d suggested in recent months; and that was ‘Application Software’, which is if you think about it, heavily represented by our picks; whether SOUN of course, or BBAI in military and commercial (and ragged performance due to how their ownership handles things; hopefully they clear away such antics for next year) … plus new RZLV and AISP (retail and biometric security respectively) as well as perhaps others are software too.Quantum stocks are all volatile, dynamic and higher. Prefer QBTS business-wise better than QUBT for now; however the latter has more shorts because it’s controversial; so can spike higher at times. And then there’s RGTI which is almost under the radar; but there’s big intellect there. It rallied sharply lately… really they all did, and it’s certainly not bargain day. So the question is how to sort them out. Well we didn’t know and nobody truly does. So far all working.I will say this: I’m still stunned that we identified the shift to Quantum; bought the first (IONQ and sold too soon); then held and accumulated ‘all’ the others, and all of them are in a couple ETF’s that represent the sector. We’ll not focus on the ETF’s, given we hold the individual tickers ‘in size’. I will note the ETF’s bring volume and liquidity to the stocks, and than ensures interest and action.In-sum: we believe that many of the new generation stocks have not peaked aside short-term aspects of course; so that for many a retreat would be what’s called a requisite stair-step drop within an upward context. But that optimistic view needs to be validated by ensuing upward action in the coming week or in the weeks after; since the year turns in the middle of the new week. Given so many expect a broad correction early in 2025; so they are trying to ‘front-run’ that prospect by selling; plus tax adjustments. But we would dampen angina in these last couple days of the year.. knowing the 2nd day will settle in 2025; while losses can be taken ‘for cash’ up until the last minute. So it’s fluid and we caution if you have confidence in what you own; don’t let rallies or brief purges get you all twisted-up unnecessarily as this fabulous 4th Quarter ends.Don’t worry too much about whether it will be a ‘Golden Chalice’ or ‘Tin Cup’ under Trump 2.0; it will probably be neither extreme (too many silly TV ads are intended to scare people about imminent depression; it’s not happening). It will be decent for business; possibly a period of calming from never-ending wars.. and of course a couple of our stocks are focused on ‘next-generation’ warfare (battle and space management) too. Ending the last of prior-Century-style combat doesn’t mean ‘peace in our times’, although it might (ask China). It does mean transition to the technologies we’ve been discussing for a long time; finally maturing. Let’s toast that next year be even half as good as Q4 :).Enjoy the weekend and an early Happy New Year!More By This Author:Market Briefing For Monday, Dec. 23rd
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