EB Daily Market Report - Special Report - Tuesday, December 9, 2025
First, let's take a quick glimpse at the market today.
It's a fairly quiet session, which is what I would expect just prior to a Fed rate decision. We're seeing bifurcated action. The Dow Jones is fractionally lower, while the other major indices are modestly higher. Small caps (IWM, +0.46%) are leading the action as energy (XLE, +0.81%) and utilities (XLU, +0.57%) are providing sector leadership. Four sectors are down today, however, including health care (XLV, -0.40%) and financials (XLF, -0.21%).
Gold ($GOLD, +0.41%) and silver ($SILVER, +4.23%) are quite strong today, while crude oil ($WTIC, -1.00%) dips back closer to $58 per barrel. Other commodities are mostly lower. Cryptocurrencies are enjoying big gains as they try to rebound from their recent 20%-30% or more declines. I don't trade cryptos, so I pay attention to them mostly to evaluate the risk environment. Cryptos are widely viewed as risk assets, so when they perform well, it's generally an indication that traders are in a "risk on" type of mood. I look for this type of market environment to benefit the U.S. stock market.
Tesla (TSLA, +2.33%) was downgraded on Monday and it fell back to test its rising 20-day EMA. Fortunately, for TSLA and for autos ($DJUSAU, +2.07%), they've regained much of what was lost yesterday. TSLA is currently trading near 450. Keep in mind it has never closed above 480, so it's not too far from making a very important breakout.
Now for the rest of today's Report....
I've received some questions recently, looking for clarity as to my market stance. I know we have a lot of new members in 2025 that don't have a long history with us and how prior cautious signals have been communicated and handled. A few questions have been asked, addressing my current cash position and how I plan to communicate that I'm "back in". Another question asked about a potential conflicting message of sending out a somewhat bullish December seasonality forecast when I've already stated that I'm cautious. Any uncertainty with respect to market conditions will increase questions. I get that.
Let me try to put my cautious stance in perspective and hopefully provide a little bit of clarity. I sent a response to a member and I think it's a good idea to share that response with our membership.
I try to distinguish between what I believe could be "rocky" times ahead vs. what I believe could be a cyclical bear market. I've only really been in that latter camp once in the last 5 years and that was during MarketVision 2022, when I felt we could see a 20-25% decline in 3-6 months to start 2022, which turned out to be very accurate.
Right now, I am simply cautious - not bearish. That's a difference worth mentioning. I would become more bearish IF price action began confirming my warning signals. So, if our major indices cleared recent price lows, that'd be rather bearish, in my view, given the warning signs I've discussed. Also, I've stated on many occasions that calling tops is extremely difficult. While most folks try to call major tops 6 times a year, the truth of the matter is that major tops occur rather infrequently. I've been investing/trading in the stock market since the early 1980s and I believe the environment right now is the most difficult I've ever encountered. For me personally, I see the stock market waffling back and forth, mirroring the Fed's volatile stance since Fed Chief Powell began leading the Fed back in early 2018. He's now presided over 4 cyclical bear markets in 7 years, plus multiple downside head fakes. Let me be clear, this is absolutely not political for me. I have criticized Powell throughout the last three administrations. I believe he's a very smart man, but not a good Fed leader. He doesn't rally his troops, speak a consistent message, and isn't nearly as transparent as his predecessors - all in my opinion, of course.
The Fed's waffling and the resulting volatility in the equity market has made short-term visibility about as poor as I can ever remember. Everything keeps changing. Keep in mind that I'm a short-term trader. So this short-term volatility has caused me, on several occasions now, to simply sell out of stocks, protect my capital, and regroup. The difficult part for me, as Chief Market Strategist for EarningsBeats, is that we have members with varying objectives. Some long-term, some short-term. Some aggressive, some defensive. Some capital appreciation, some income. Some investing, some trading.
It's very difficult to send out one message that every member understands as it relates to their own unique strategies and objectives. I really hesitate to send out too many messages that specifically address what I'm personally trading. I could be trading AAPL long one day and completely out of it the next. I might even be out of it 30 minutes after discussing being in it. That's how fast I trade at times. I prefer to buy and hold stocks for days and, many times, weeks. But I find the current environment very difficult for that strategy. One minute, the market believes rate cuts are coming, the next it fears inflation.
My long-term strategy basically remains unchanged. Stay long. That's my opinion. It's only the short-term trading and trying to protect my trading capital that I worry about and likely where some confusion comes in.
When I make calls like the one recently, where I say I'm going to cash, this is the way I hope members perceive it:
"Wow, Tom is going to cash. Obviously, he's growing more cautious and wants to reduce risk. Maybe I should consider lessening my short-term trading exposure and risk in some way." From there, it's up to members. As you correctly point out, I'm not a Registered Investment Advisor. Going any further in my "suggestion" to sell positions or re-enter positions is a borderline gray area, in my opinion. I don't expect members to move into and out of cash in the same manner that I do, nor do I want them to. Many members work or are otherwise distracted throughout the trading day and do not want to pay that type of minute-by-minute attention to the stock market. I get that. However, part of our service is helping to provide market guidance, both short-term and long-term. And our track record is unparalleled, in my opinion. I do not take it lightly when I express caution. I can tell you that I've done my research and warning signs are flashing.
When I grow cautious near-term, I usually move to cash to "reset" my thinking and protect capital while I consider different trading strategies. I never intend to remain 100% in cash until the "coast is clear". Quite honestly, the coast is never clear in the stock market. There are always worries. I just try to evaluate the risk in the market and how much of it I'm willing to take given all of my signals and my own gut feeling. I have not traded ANYTHING since I said I was moving to cash. I remain 100% in cash right now and have no plans to trade until I evaluate the post-Fed trading that will begin at 2pm ET tomorrow. I want to see what the Fed says and then evaluate how the market reacts. Where does the money rotate to? Does Wall Street move money into areas that is consistent with the message I interpret from the Fed? In other words, does the market reaction make sense?
As it relates to the monthly Seasonality Report, I try to provide an objective report monthly based on facts. I don't interject my own personal biases. Seasonality is nothing more than a secondary indicator, in my opinion, and it is what it is. It's similar to divergences, sustainability ratios, sentiment, etc. Every single indicator takes a back seat to price action, which is my primary indicator.
Small caps hit a new all-time high today. The S&P 500 and NASDAQ are within a stone's throw to another all-time high. PRICE ACTION IS BULLISH. My cautiousness is borne from the increasing number of indicators that are beginning to point to the POTENTIAL of a market top.
Think about it this way. If I was a meteorologist and I suggested that there was the POTENTIAL of a tornado in your area, say 30% chance, would you immediately run to your basement or would you simply be aware that the possibility of a tornado exists? Hopefully, it would be the latter. I do not see a bear market coming, at least not based on what I'm seeing right now. That could change, by the way. I see the POSSIBILITY of a correction. The risks of a correction are increasing, based upon changes in my signals. I moved to cash, because I simply didn't want the risk right now, not because I believed a major market crash was about to unfold.
I'll likely be back to trading within a couple days to a week after the Fed meeting, though I sincerely doubt I'll be "all in". We may re-establish our portfolios shortly after the Fed meeting, or maybe not. I made a "be careful" call IN CASE we get some high market winds (not even a tornado). That's what I do when my signals warrant it.
I hope this helps to provide everyone a bit more clarity.
Happy trading!
Tom