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Santa Rally Stalls: Tech vs. Cyclicals · The SPY Trader

• 0:00
  Welcome back to Spy Trader , your early morning guide to crushing the market !
• 0:04
  I'm your host , Skip 'The Dip ' Johnson , and it is 5 am on Sunday , December 28th , 2025 , Pacific time .
• 0:13
  We're winding down the holiday season and setting up for the final few critical trading days of the year .
• 0:19
  Let's get straight into what matters before the markets open .
• 0:22
  Since our last checkin , the news flow has slowed down significantly , which is typical for the final week of December .
• 0:30
  Most major earnings reports are behind us , and we are primarily seeing forwardlooking statements and minor institutional adjustments .
• 0:38
  The overriding narrative remains centered on low liquidity and positioning for Q1 2026 .
• 0:45
  The biggest insight right now is the ' Santa Rally' effect struggling to find serious traction .
• 0:51
  While we saw scattered strength in specific megacap tech names early last week , overall volume is extremely light .
• 0:59
  This light volume means price moves can be easily magnified , both up and down .
• 1:05
  For example , any slight downward pressure on the S&P 500 ETF , SPY , might look like an exaggerated drop simply because there aren't enough retail buyers currently available to absorb the institutional selling pressure .
• 1:21
  We are seeing continued portfolio rebalancing , especially among institutions trying to lock in those yearend gains or perform some ' window dressing—making their final reports look as strong as possible .
• 1:33
  The technology sector , tracked heavily via the QQQ ETF , continues to show the most relative strength , demonstrating enduring investor confidence in growth heading into the new year , even as defensive and energy sectors lag .
• 1:49
  Given the thin market , volatility is the biggest risk this week .
• 1:54
  For trading today and Monday , I have two shortterm takes .
• 1:58
  First , for those looking for momentum and exposure to anticipated 2026 growth , focus on the tech giants .
• 2:05
  ETFs like QQQ are showing strong technical stability near their recent highs .
• 2:11
  We recommend maintaining a small long position here , but you must set tight stops , as the broader market seems poised for sharp swings .
• 2:21
  This position is supported by the sustained optimism in forward guidance from major tech companies like Microsoft .
• 2:28
  Second , exercise extreme caution on cyclical sectors that have lagged significantly .
• 2:34
  Energy stocks , often tracked via the XLE ETF , have struggled to maintain any meaningful momentum , especially against slightly falling oil and gas futures .
• 2:46
  If you are looking for a quick contrarian hedge against the broad market , a small short position on XLE or similar weak cyclical stocks provides a decent risk/reward profile heading into the final few trading days .
• 3:00
  Remember , trade smart , manage your risk , and I'll catch you on our next update .