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AI Dominance: Trading the Wall of Worry at AllTime Highs · The SPY Trader

• 0:00
  Good morning , and welcome to Spy Trader .
• 0:03
  I'm your host , Chip Futures , bringing you the early read on the markets .
• 0:07
  It's 5 am on Tuesday , December 30th , 2025 , Pacific time , and we are closing out what has been another spectacular year for US stocks .
• 0:16
  The S&P 500 is trading near alltime highs , proving that the bull market is far from finished , even as we enter this thin , holidayshortened trading week .
• 0:27
  Let's dive into the headlines .
• 0:30
  The major indices are set to close 2025 with strong doubledigit gains .
• 0:35
  The S&P 500 , tracked by the SPDR S&P 500 ETF Trust , is up approximately 17.56% yeartodate , hitting 39 new alltime highs in 2025 .
• 0:51
  This growth is heavily concentrated : Information Technology is the undisputed champion , leading the pack with roughly 25.80% YTD gains , followed closely by Communication Services at 21.19% .
• 1:08
  The main driver remains the relentless enthusiasm and investment boom surrounding Artificial Intelligence .
• 1:16
  On the macro front , geopolitical tensions are still heating up , lifting the Energy sector by about 0.95% in the prior session due to rising oil prices .
• 1:27
  Meanwhile , safehaven assets like Gold and Silver have hit alltime highs as investors seek shelter amidst global strain .
• 1:36
  Volatility is strikingly low , with the VIX near its 2025 bottom , suggesting investors are quite comfortable with the current market trajectory .
• 1:47
  Our analysis reveals a market climbing what we call a ' wall of worry .
• 1:51
  ' The economic foundation remains solid , highlighted by a strong thirdquarter GDP growth rate of 4.3% annualized .
• 2:01
  However , we have a few sticking points : inflation is proving to be stubbornly sticky , expected to settle closer to 3% than the Federal Reserve’s 2% target .
• 2:13
  And despite strong GDP growth , we see that peculiar ' vibepression ' where consumer sentiment is depressed , reinforcing that Kshaped economic backdrop .
• 2:23
  Looking at individual stocks , the AI trade continues to propel key players .
• 2:28
  Micron Technology was a strong performer in the recent session , gaining over 3.41% .
• 2:34
  Conversely , some highgrowth names like Tesla and Palantir were showing declines , suggesting profittaking or rotation is occurring within the highgrowth space .
• 2:45
  We also saw some exciting M&A news , with DigitalBridge surging on reports of takeover talks with SoftBank .
• 2:52
  So , how do we trade this latestage expansion ?
• 2:55
  Our core thesis is to remain invested but balanced , recognizing stretched valuations in some areas .
• 3:02
  First , maintain your core longterm exposure to the broad market , as corporate earnings are still expected to grow and drive gains .
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  You can do this easily with the Vanguard S&P 500 ETF , VOO .
• 3:17
  Second , you must capitalize directly on the dominant theme : AI .
• 3:21
  Focus on the Technology Select Sector SPDR Fund , XLK , for broad exposure , or specific AI infrastructure beneficiaries like Micron Technology .
• 3:33
  Third , given the sticky inflation and ongoing geopolitical risks , allocate a small portion to defensive assets .
• 3:41
  Consider Real Estate via the Vanguard Real Estate ETF , VNQ , which is considered relatively inflationresistant , or use SPDR Gold Shares , GLD , as a direct hedge against global uncertainty .
• 3:56
  Finally , fixed income has benefited greatly from the Fed's rate cuts in 2025 .
• 4:01
  Investors seeking continued stability and income should look at core holdings like the Vanguard Total Bond Market ETF , BND .
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  That's your early read for Tuesday .
• 4:13
  Trade wisely , everyone .