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Bull Market Altitude: Rate Cuts and Tech Titans · The SPY Trader

• 0:00
  Welcome back to Spy Trader .
• 0:02
  I'm your host , Barry Bullman , and it's 6 am on Tuesday , October 28th , 2025 ( Pacific ) .
• 0:10
  We are still riding high on a magnificent bull market that just hit its threeyear milestone .
• 0:15
  The S&P 500 recently closed above 6,800 for the first time ever , and the Nasdaq Composite is also notching record highs .
• 0:26
  Now , most investors feel like ' reluctant bulls ' because valuations are stretched , but momentum is undeniable .
• 0:34
  Let's break down the drivers and figure out how to navigate these heady heights .
• 0:38
  The big story this morning is the twin engine driving this rally : Tech dominance and rate cut euphoria .
• 0:46
  The market is overwhelmingly optimistic about monetary policy easing .
• 0:51
  The FOMC meeting begins this week , and the widespread expectation is for a 25 basis point rate cut , marking the second cut of the year .
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  This optimism is fueled by the delayed September CPI report showing a coolerthanexpected inflation rate of 3.0% yearoveryear .
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  Second , corporate earnings are phenomenal .
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  Approximately 83% of companies are beating analyst expectations .
• 1:19
  In specific company news , Qualcomm saw a massive surge , up 11% in one session , after announcing a new AI chip for data centers , setting up a direct challenge to leaders like Nvidia and AMD .
• 1:32
  Meanwhile , Amazon confirmed plans for its largestever corporate layoff , cutting 30,000 jobs , which the market surprisingly viewed as a positive sign of efficiency ahead of their Q3 report .
• 1:44
  Diving into the analysis , this is not a broad market rally ; it's extremely concentrated The S&P 500’s forward P/E ratio is elevated at 22.7 , well above the 10year average of 18.6 , which explains the caution .
• 2:02
  The rally is being driven by the ‘ Magnificent 7 ’ and the AI narrative .
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  Technology Select Sector SPDR Fund ( XLK ) is the clear sector leader , up nearly 29% yeartodate .
• 2:17
  This makes sense when you consider the data : megacap tech stocks are expected to see 15% earnings growth this quarter , compared to only 6.7% for the other 493 S&P 500 companies .
• 2:32
  While defensive sectors like Utilities and Consumer Staples are mixed or negative , growth sectors , including Industrials , which is benefiting from strong economic activity , are performing well .
• 2:45
  This concentrated strength means we need to align our portfolio with the leaders while hedging the valuation risk .
• 2:52
  For core exposure , maintain diversified exposure through ETFs like Vanguard S&P 500 ETF ( VOO ) , but tactical allocation demands overweighting growth .
• 3:06
  We strongly recommend increasing exposure to Invesco QQQ Trust ( QQQ ) or the Technology Select Sector SPDR Fund ( XLK ) to capture the continued upside from AI players and the Magnificent 7 earnings power .
• 3:22
  Given the high conviction around a Fed rate cut , we also need to hedge and capture the bond market rally .
• 3:28
  A safe bet here is adding to core bond funds like iShares Core U.S.
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  Aggregate Bond ETF ( AGG ) .
• 3:37
  For a highconviction rate play , consider iShares 20 Year Treasury Bond ETF ( TLT ) , which is highly sensitive to falling longterm yields .
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  On the individual stock front , look for resilience .
• 3:50
  UnitedHealth Group ( UNH ) reported betterthanexpected profit and raised its fullyear outlook , providing a strong anchor in the defensive Health Care sector .
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  On the other hand , monitor Berkshire Hathaway ( BRK.B ) following its recent downgrade , a potential sign of market rotation out of value and into pure growth .
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  Stay nimble , stay bullish , and I'll catch you on the next Spy Trader .