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AI, Record Highs, and the Smart Money Rotation · The SPY Trader

• 0:00
  Welcome back to Spy Trader .
• 0:02
  I'm your host , Barry Bullish , and it's 5 am on Friday , December 26th , 2025 , Pacific .
• 0:10
  We are closing out a fantastic trading week , and the Santa Claus Rally is in full swing .
• 0:17
  The US stock market is exhibiting strong bullish momentum , with major indices setting new records , largely thanks to continued enthusiasm for everything AI.The S&P 500 closed near 6,932 , setting a new record , and the Dow Jones Industrial Average was the top performer in the last session , surging 0.60% and hitting its own record close near 48,731 .
• 0:47
  The fear gauge , the CBOE Volatility Index , continues to trend lower , reflecting high market confidence .
• 0:54
  What's driving this action ?
• 0:56
  The core market theme remains the AI saga .
• 0:59
  We saw key semiconductor stock Micron Technology , MU , jump 3.8% .
• 1:06
  Highlighting the continued infrastructure spend , datacloud company Snowflake is reportedly in advanced talks to acquire the AInative startup Observe for approximately 1 billion .
• 1:18
  On the corporate action front , Nike shares rose 4.6% after Apple CEO Tim Cook disclosed a personal purchase of the stock , a nice vote of confidence .
• 1:29
  The macroeconomic backdrop is mixed but strongly resilient .
• 1:32
  Thirdquarter US GDP growth came in surprisingly strong at 4.3% annualized , well above the 3.2% consensus forecast .
• 1:42
  That suggests significant economic health , powered by consumer and government spending .
• 1:49
  However , this strength has tempered expectations for nearterm Fed rate cuts , even though the central bank has already cut its benchmark rate three times since September 2025 .
• 2:00
  This caused the 10year Treasury yield to rise slightly to around 4.15% .
• 2:07
  We also have to acknowledge that despite the booming economy , consumer confidence has fallen for five consecutive months , the longest streak since 2008 , indicating middle and lowerincome consumers are worried about high prices .
• 2:22
  When we look at the sectors , Information Technology remains the leader over the last 12 months , driven by AI , and it recently led gains , suggesting investors are buying the dip in technology .
• 2:34
  But smart money is also rotating .
• 2:38
  Health Care and Communication Services have both been upgraded to Outperform , driven by solid fundamentals .
• 2:44
  Meanwhile , Consumer Staples lagged , slipping 0.5% , with names like Walmart and Costco viewed as overvalued .
• 2:52
  So , how do we trade this record environment ?
• 2:55
  Our strategy is balanced .
• 2:57
  First , maintain your core broad market exposure to capture this rally .
• 3:01
  The Vanguard S&P 500 ETF , VOO , is an excellent lowcost way to do this .
• 3:09
  Second , keep targeted exposure to the leadership theme .
• 3:12
  Selective exposure to highgrowth tech through the Invesco QQQ Trust , QQQ , or pure AI infrastructure plays like NVIDIA , NVDA , is crucial .
• 3:23
  Third , chase the rotation .
• 3:25
  Since Health Care is now rated Outperform , look at the Health Care Select Sector SPDR Fund , XLV , to gain exposure to those solid fundamentals .
• 3:35
  Finally , don't ignore stability .
• 3:38
  Given persistent inflation , even with strong GDP , bonds and gold offer portfolio stability .
• 3:45
  Consider the Vanguard Total Bond Market ETF , BND , or SPDR Gold Shares , GLD , as gold is hitting record highs .
• 3:55
  That’s your wrapup for this morning .
• 3:57
  I’m Barry Bullish , and this has been Spy Trader .
• 4:00
  Trade safely , folks !