Weekly Watchlist Dec 15: Quad Witching
Is the Santa Rally cancelled?
Welcome back to another Weekly Trade Plan with The Dividend Journal! If this is your first time here, great timing. This newsletter is your one stop briefing to stay ahead of the market and step into the week fully prepared.
šÆ Initial Thoughts + TLDR
Correction from last week, THIS FRIDAY is quad witching.
The Federal Reserve cut the federal funds rate by 25 basis points bringing target rates to 3.50%ā3.75%. This was expected and the Fed is now expecting only one cut in 2026. The interesting part is that we have a split Fed on cuts, especially with presidential pressure on cutting more aggressively.
The market rallied a bit but then has seen steep declines afterwards. In some part, this was because of Oracleās earnings. The company missed revenue expectations while planning a large increase in capex, especially on AI data center buildāouts. Investors fear if AI hardware and infrastructure investments are delivering real returns.
With growth expectations adjusting and rate outlook becoming less aggressive, thereās been a rotation out of large tech and into more rate sensitive names. This is why we have seen the Russell 2000 hit new highs after five years of consolidation.
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Key Earnings & Economic Calendar
Tuesday, December 16: Unemployment Rate
Thursday, December 18: CPI
Friday, December 19: UoM Consumer Sentiment + Quad Witching
Courtesy of Earnings Whispers:
š Market Update: As of Friday, Dec 12
SPY 0.00%ā: Weāve had a pretty ugly close on the week for the market as a whole with large volume. This can be seen as a potential top that can only be invalidated with a strong push to new highs. The Dow continues to be strong with financials leading the strength while most tech are getting hit with sells. This reset is essentially flushing out unrealistic expectations and high valuations. The companies that report substantial growth will be the ones that dominate and to focus on.
Bitcoin: If youāre a bull on crypto, this is not what you want to see. Shaping up to be a bear flag and very weak. Weāve tried to break past recent highs that has now posed as heavy resistance. This is the type of action we see only when sellers are dominant and in control.
š What Iām Watching
TSLA 0.00%ā: The highest weekly close ever with increasing volume makes me lean more bullish. This is on the weekly timeframe and shows an attempt of a breakout to new ATHs after a year of action. Over 474 will likely lead to a crazy push to 500+.
Trade Plan: Taking 1/16 500C over 474 targeting 500+
JPM 0.00%ā: Similar concept as TSLA 0.00%ā where price closed with its highest weekly close ever on exceptionally high volume. I am expecting financials to continue with their strength and I want to see this bank make a similar move as GS 0.00%ā and C 0.00%ā. This is basically a sympathy play.
Trade Plan: Taking 1/16 325C over 320.5 targeting 327+
SMCI 0.00%ā: Really weak price action like ARM 0.00%ā and it seems like we will see a hefty correction on these less stronger semiconductor names. NVDA 0.00%ā and other larger semiconductors have seen some weakness too near the highs and so naturally the weaker names will be even weaker.
Trade Plan: Taking 1/16 32P under 31.45 targeting 28 and under
šClosing Thoughts
Really weak price action with healthcare and financials relatively strong. Itās clear that you need to be defensive going forward and into EOY. It might be best to just conserve capital and close the year strong. No point in throwing away the yearās hard work in this low probability environment.