Latest / The SPY Trader / The Great Sector Swap: Capital Shifts to Value

Transcript

The Great Sector Swap: Capital Shifts to Value · The SPY Trader

• 0:00
  Welcome back to Spy Trader , the podcast where we cut through the noise and figure out exactly how to position our portfolios for the day ahead .
• 0:09
  It's 5 am on Thursday , November 13th , 2025 , Pacific time , and I'm your host , Penny Stockman .
• 0:17
  We've got a tricky market this morning , folks .
• 0:20
  While the macro news is overwhelmingly positive , we are seeing a major rotation under the hood .
• 0:27
  The market is mixed but moving , with the Dow hitting an alltime high , but the techheavy Nasdaq is looking a little wobbly .
• 0:35
  We need a targeted strategy today , so let's jump into the headlines .
• 0:40
  First , the good news driving overall optimism : the U.S.
• 0:44
  federal government shutdown , which lasted a painful 43 days , is finally resolved .
• 0:50
  This massive uncertainty overhang is gone , fueling the bullish sentiment we see in industrial and value stocks .
• 0:58
  Further supporting this optimism , the Federal Reserve recently cut interest rates by 25 basis points , placing the benchmark rate between 3.75% and 4.0% .
• 1:10
  This confirms we are in an easing cycle , which is generally fantastic news for both stocks and bonds .
• 1:18
  However , the indices tell a story of divergence .
• 1:21
  The Dow Jones Industrial Average is up a healthy 0.68% , showing strength in those blue chips .
• 1:28
  But look at the Nasdaq Composite , which is down 0.26% .
• 1:33
  The S&P 500 is caught in the middle , barely flat at plus 0.06% .
• 1:40
  This tells us that investors are actively shifting capital .
• 1:45
  On the earnings front , we saw huge disparity .
• 1:48
  Advanced Micro Devices , AMD , was the major winner , surging 9.00% after projecting a stunning 80% annual growth rate for its AI data center business over the next three to five years .
• 2:01
  Cisco Systems , CSCO , also raised its profit and revenue forecasts , sending its premarket trading up nearly 7% .
• 2:11
  But not everyone is happy .
• 2:13
  The Walt Disney Co.
• 2:15
  , DIS , shares fell 3% after reporting worsethanexpected revenue , suggesting persistent concerns about consumer spending , especially after the recent shutdown .
• 2:27
  So , what's driving the market's behavior ?
• 2:29
  It's all about rotation and valuation .
• 2:32
  Investors are taking profits in the highflying tech sector , where valuations are stretched , and moving into cyclical and defensive value stocks .
• 2:40
  We see this clearly in sector performance .
• 2:43
  Financials , tracked by the XLF ETF , are strong , up 0.91% .
• 2:49
  Health Care , XLV , is even stronger , up 1.40% .
• 2:55
  These sectors benefit immediately from the return of economic certainty and reduced geopolitical uncertainty , such as the new temporary trade truce with China .
• 3:06
  Technology , despite the strong YTD gains , is dealing with volatility due to those valuation concerns , hence the Nasdaq's dip .
• 3:16
  We also see weakness in Energy , down 1.42% , and Consumer Discretionary , down 0.70% , confirming caution on consumer health .
• 3:28
  In terms of bonds , with the Fed easing , fixed income looks attractive as a diversifier .
• 3:34
  The iShares Core U.S.
• 3:36
  Aggregate Bond ETF , AGG , currently boasts a competitive 30day SEC Yield of 4.14% .
• 3:45
  This is a crucial hedge .
• 3:47
  Now , let's talk strategy .
• 3:49
  Given the simultaneous relief rally in cyclicals and profittaking in tech , our approach must be balanced .
• 3:57
  First , for your core exposure , we recommend overweighting the broader market .
• 4:02
  Stick with the SPDR S&P 500 ETF Trust , SPY .
• 4:07
  SPY captures the rotation into value and benefits most directly from the end of the shutdown and the Fed easing cycle .
• 4:15
  Hedge funds have been increasing their holdings , signaling institutional confidence .
• 4:21
  Second , tactically overweight cyclical sectors .
• 4:24
  The clear winner here is Financials .
• 4:27
  Initiate or increase your position in the Financial Select Sector SPDR Fund , XLF .
• 4:33
  Financials are leading the Dow's surge , have strong fundamentals from Q3 earnings , and have moderate valuations compared to Big Tech .
• 4:43
  Third , be highly selective in growth .
• 4:46
  Skip the broad tech index for now .
• 4:48
  Instead , focus on highconviction names like Advanced Micro Devices , AMD .
• 4:54
  Its projected 80% growth rate in AI data centers provides the specific , concrete catalyst you want when the broader tech sector is selling off .
• 5:04
  Keep a position in QQQ , but don't add new capital just yet .
• 5:09
  Finally , for risk management , maintain a core allocation to investmentgrade bonds .
• 5:14
  Use the iShares Core U.S.
• 5:16
  Aggregate Bond ETF , AGG .
• 5:20
  With the Fed easing , its 4.14% yield offers excellent income and stability as a critical portfolio hedge .
• 5:28
  That’s all the time we have for this edition of Spy Trader .
• 5:31
  Stay selective , stay disciplined , and happy trading .