I’m seeing exactly what I anticipated in the markets: higher volatility.
After starting the week relatively flat, equities saw a sharp rally following the FOMC meeting mid-week before pulling back into Friday. While the S&P 500 struggled to push past its prior highs, the broader indices quietly broke out. The Dow, Russell 2000, and the S&P 500 Equal Weight all printed fresh all-time highs, a great sign for the overall health of the market.
This volatility was driven by a dovish-leaning Federal Reserve, a rise in long-term yields, and renewed concerns surrounding AI infrastructure spending, which was sparked by the latest earnings reports and elevated capital expenditure guidance.
Strong economic data and supportive bullish seasonality remain a tailwind, but leadership in the technology sector is showing weakness. This is forcing the market into a rotation-driven tug-of-war rather than a clean trend higher.
In short:
-
Rotation Over Concentration: Mega-cap technology stocks displayed weakness, while equal-weight and small-cap indices outperformed. This signals a much healthier internal market structure.
-
AI Spending Scrutiny: Increased CapEx guidance for next fiscal year (e.g., jumping from $35B to $50B in one instance) has revived fears of AI overinvestment, putting pressure on semiconductor and momentum stocks.
-
Seasonality + Performance Chasing: Bullish year-end seasonality and the potential for Q4 performance chasing still provide supportive tailwinds.
Technical Levels & Market Signals
-
S&P 500 Equal Weight (SPXEW): Broke above the $7,800 resistance level to reach fresh all-time highs.
-
Key level to hold next week: 7,800.
-
Near-term bias: Bullish if the breakout holds.
Mega-Cap Tech:
-
Near-term structure looks fragile as the AI narratives cool slightly.
-
Underperformance may persist without a new, significant catalyst.
Economic Data, Rates & the Fed
FOMC Takeaway:
-
The Fed cut rates by 25 basis points (3.50–3.75%).
-
The new dot plot implies fewer future cuts but also a stronger growth outlook.
-
The market’s overall interpretation of the meeting leaned dovish.
Labour & Growth Signals:
-
JOLTs data surprised to the upside, suggesting tighter labour conditions.
-
GDPNow was revised up to 3.6%, reinforcing economic growth resilience.
The good news is, if you’ve been day trading…. you’ve probably had some very nice swings!
🟢 If you found this post interesting, please consider adding me to your watchlist or copying my portfolio.
🟢 Find Me:
I post regular charts and research updates on my Patreon: www.patreon.com/c/JodyKnight_TheCraftyTrader
@JodySlaney with CISI Lvl 3 Wealth & Investment Management
🟢 Disclaimer:
The views expressed above are my personal opinion and do not constitute investment or financial advice. Please remember that your capital is at risk, and past performance is not a reliable indicator of future results.
$SPX500 $SPY (SPDR S&P 500 ETF) $NSDQ100 $QQQ (Invesco QQQ)