●  S&P 500 surges 3.73% to 6,849 as sentiment shifts positive with buyers rotating back into AI stocks

● Expectations for December rate cut jump to 87% from under 25% just weeks ago as Fed maintains accommodative stance

● Earnings season exceeds expectations with 60% of companies beating EPS estimates and strong guidance trends

● WTI crude rebounds 2.67% to $59.52 on Russia-Ukraine peace talk delays and geopolitical risk premiums

● Gold rallies 3.64% to $4,247 per ounce on dollar weakness and rising rate cut expectations for December meeting

● Market sentiment remains constructive with technical indicators resetting to healthy levels after recent consolidation

The S&P 500 posted a strong advance of 3.73% during the shortened Thanksgiving trading week, closing at 6,849. This represented one of the strongest November reversals in market history. The rally came as investors rotated back into AI stocks following a brief correction, with expectations for a December rate cut jumping dramatically to 87% from levels below 25% just weeks earlier.

The market rebounded sharply from its November 21st low of 6,522, where price action found support at approximately 35 RSI and crossed below the daily bottom Bollinger Band at 6,564. The subsequent reversal into Monday's open filled the gap up to 6,775, with continued momentum pushing through 6,800 resistance and ultimately reaching 6,850 by Friday's close.

Market participants appear to view recent price action as primarily driven by sentiment shifts rather than fundamental changes. The AI infrastructure backdrop has actually improved over the past month, particularly following Nvidia's strong quarterly results and a historically robust Q3 2025 earnings season. The correction witnessed in mid-November reflected temporary anxiety about potential AI valuation concerns rather than underlying weakness in demand or fundamentals.

From a technical perspective, the index bounced off critical support levels and reset key momentum indicators. The daily RSI found support at the crucial 60 level, historically an area that has provided uptrend support. Meanwhile, the daily top Bollinger Band has shifted higher to 6,915, suggesting room for further upside as overbought conditions have normalized through the recent pullback.

Third quarter earnings season continued to significantly exceed expectations across multiple metrics. Analysis shows 60% of S&P 500 companies beat EPS expectations while 59% surpassed revenue forecasts. Perhaps most notably, corporate guidance has been exceptionally strong, with 59% of companies providing positive forward guidance compared to the historical average of 44%.

This positive guidance trend has driven upward revisions to earnings estimates, creating statistically favorable conditions for stock prices over the subsequent three-month period. When both the earnings estimate revisions ratio and positive guidance ratio improve during earnings season, the S&P 500 has historically averaged gains of approximately 4.0% over the following quarter.

AI and autonomy-related stocks demonstrated exceptional strength during the reporting period. Technology companies focused on AI infrastructure, database management, and cloud services reported particularly robust results. In contrast, consumer-facing sectors showed more mixed performance, with retail and restaurant stocks experiencing greater volatility following their earnings releases.

The earnings data suggests the market is experiencing a clear bifurcation, with companies positioned in high-growth technology sectors significantly outperforming traditional consumer-facing businesses. This sector rotation pattern has important implications for forward positioning and strategic allocation decisions.

The ongoing government shutdown, now exceeding 30 days, has created a significant data blackout for key economic indicators. While September employment data was recently released showing mixed signals, October figures remain unavailable and November data reporting has been pushed back an additional two weeks.

Alternative employment indicators suggest labor market conditions improved in October following September weakness. Proprietary employment indices show a bounce back after earlier declines, with expectations for ADP employment numbers to potentially surprise to the upside when released. This improvement in labor data has important implications for Federal Reserve policy decisions.

The employment situation remains a critical variable for Fed policy, with recent months showing two instances of negative job growth that signal the economy may be approaching peak expansion. However, the rebound in alternative employment metrics suggests the labor market may be more resilient than headline numbers initially indicated.

September PPI inflation data, delayed over a month due to the government shutdown, showed headline PPI at 2.7%, in line with expectations. Core PPI fell to 2.6%, below the expected 2.7%. While inflation remains above the Fed's 2% target, the current levels are not deemed hot enough to halt the rate cutting cycle, particularly given labor market softness.

The absence of key inflation metrics such as PCE and CPI due to the shutdown creates uncertainty, but available data combined with alternative inflation indicators suggests the fundamental backdrop for continued Fed accommodation has not changed materially. This supports the view that the Fed will proceed with additional rate cuts.

The technical configuration for the S&P 500 appears constructive following last week's strong rally. The index has broken above the 6,735 level and reclaimed the trend line from recent highs, suggesting the near-term bias should be to the upside. As long as this support holds, we believe further gains are likely.

Key technical indicators have reset to healthier levels through the recent consolidation. The daily RSI declined from overbought territory to approximately 51, creating substantial room for renewed upside momentum. The daily bottom Bollinger Band has shifted to its highest level on record, suggesting long-term support levels continue to rise.

Statistical analysis indicates favorable conditions for stock market gains. When sentiment turns modestly bearish while declining from the previous quarter, the S&P 500 has historically posted a three-month success rate of 80.1% with average gains of 3.1%. Combined with improving earnings estimate revisions and positive guidance trends, the statistical backdrop supports continued upside.

However, investors should note that money flows remain in a negative trend since the October 29th peak, even though capital returned to markets last week. This suggests maintaining some caution despite the improved technical picture. We continue to favor an overall long bias while remaining alert for short-term trading opportunities.

Market pricing for a December rate cut has shifted dramatically to 87%, representing a new high and up sharply from odds of under 25% seen just weeks ago. This change reflects a combination of factors including comments from Fed officials and the return of economic data following the government shutdown.

Fed Governor Christopher Waller recently stated the labor market is weak enough to warrant another 25 basis point rate cut in December, though policy decisions beyond that will depend on incoming data. New York Fed President John Williams echoed similar sentiments, helping shift market expectations for near-term rate cuts.

We believe the balance of the Fed's dual mandate has shifted significantly toward labor market concerns. While inflation remains above the 2% long-term target, labor market weakness has become the more pressing issue for policymakers. This challenging macroeconomic backdrop supports our view that the Fed will maintain its accommodative bias and deliver the expected December cut.

The ongoing government shutdown creates additional uncertainty about economic conditions, which should push the Fed toward maintaining policy flexibility through continued rate reductions. Without complete data visibility, the central bank is likely to err on the side of supporting the labor market.

This week features important earnings releases from companies positioned across the AI infrastructure stack. The concentration of AI-related names reporting creates potential for significant sector movement based on commentary around demand trends and capital expenditure plans.

Database and data management companies are particularly interesting given their critical role in AI applications. Snowflake reports Wednesday, with data checks pointing to continued strong demand as businesses centralize their data infrastructure. The cloud-native data platform has become integral to AI workflows, benefiting from increasing demand for storing and processing unstructured data.

Industry analysis suggests Snowflake could beat estimates by 3% or more, implying 30% year-over-year growth in product revenue. Page view data shows an 82% correlation with product revenue, and after a seasonally soft August, activity picked up solidly in September and October. This pattern suggests a strong likelihood of both beating current quarter estimates and raising fourth quarter guidance.

nCino also reports Wednesday, with expectations for another beat-and-raise quarter. The financial technology platform has seen earnings trending higher consistently, and short interest remains elevated despite positive fundamentals. This creates an interesting technical setup where a strong earnings report could drive both fundamental buying and short covering.

American Eagle Outfitters reports Tuesday, with attention focused on the impact of their advertising campaigns. The company's recent marketing initiatives have generated significant consumer attention, and early indications suggest positive momentum. The key technical level to watch is the $20 area, which has served as both support and resistance in recent months.

WTI crude closed the week 2.67% higher at $59.52 per barrel, recovering from earlier weakness as Russia-Ukraine peace talks dragged on longer than initially expected. Signs that a peace deal might be imminent pushed oil prices down sharply early in the week, but they recovered into Friday as negotiations continued without resolution.

The market attempted to establish a floor at the $57.00 level, finding support at $57.10 on November 10th before turning sharply higher. This came with a bounce off approximately 40 support in the daily RSI and multiple crosses below the daily bottom Bollinger Band, now at $57.66, in a clear indication of oversold technical conditions.

From a fundamental perspective, little has changed in the oil market backdrop aside from the shifting expectations around the Russia-Ukraine situation. However, we believe much of the bearish narrative has been priced into the market over the short run, creating conditions for a technical bounce even without significant fundamental improvement.

The technical setup shows WTI crude testing the top end of its recent trading range. The daily top Bollinger Band trades at $61.38, well above current levels, while the daily RSI stands at approximately 47, below both overbought levels and the top end of the recent range around 55.

We believe the $60.00 level serves as a near-term pivot point, with the $61.28 high from November 11th representing initial upside resistance. The improved technical positioning following the recent decline to oversold levels suggests the path of least resistance may be higher in the near term.

Based on the combination of oversold technical indicators, geopolitical risk premiums remaining elevated, and the market having priced in much of the bearish supply narrative, we maintain a constructive view on crude oil with a $62.00 target and $54.00 stop-loss.

Gold prices for February delivery closed the week 3.64% higher at $4,247 per ounce, officially posting a four-month winning streak. The rally came as expectations for a December rate cut rose dramatically and the US Dollar Index fell sharply from recent highs.

The dollar rose into a high of 100.40 on November 21st before turning lower, effectively rejecting the 100.50 resistance level. The daily RSI broke below 50 support on Friday as the dollar fell to 99.40, removing a key headwind for precious metals. This dollar weakness, combined with rising rate cut expectations, created favorable conditions for gold's advance.

Comments from heavyweight Fed officials including Governor Christopher Waller and New York Fed President John Williams, along with the release of soft economic data following the government shutdown, have reinforced expectations that the central bank will cut rates next month. This dovish shift provides fundamental support for gold prices.

The fundamental case for gold ownership remains robust across multiple dimensions. Central bank demand continues at historically elevated levels, geopolitical tensions persist globally, and real interest rates remain negative despite recent nominal rate increases. Additionally, the ongoing government shutdown creates uncertainty about economic data and fiscal policy, traditionally supportive factors for safe-haven assets.

The US Treasury posted a $284.4 billion deficit in October, marking the worst opening month to any fiscal year in history. As deficit spending soars while the Fed cuts rates into a stagflationary environment, and with global central bank gold demand remaining robust, conditions appear favorable for new all-time highs in precious metals.

The recent strength in the dollar, while creating near-term pressure on gold prices, appears unsustainable from a technical perspective. The Dollar Index reached a daily RSI of approximately 67 and crossed above its daily top Bollinger Band at 99.67, indicating overbought conditions. Without sufficient fundamental support for a sustained dollar rally, this strength should prove temporary.

Snowflake represents a compelling opportunity in the AI-powered data infrastructure space. The company reports third quarter 2025 earnings on Wednesday, December 3rd after market close, with consensus expectations calling for EPS of $0.35 on revenue of $1.18 billion.

The fundamental story centers on Snowflake's position as a leader in cloud-native data platforms. The company stores structured, semi-structured, and unstructured data, with AI tools for images, video, and documents all stored as unstructured data. This makes Snowflake an integral part of the AI infrastructure stack.

Snowflake runs on all major hyperscaler clouds and is seeing growing demand for its own processing and development platform. The company benefits from the secular trend of businesses physically centralizing their data and broadening its use across regions and business units.

Industry data checks point to continued strong demand trends. Analysis shows an 82% correlation between Snowflake's page views and product revenue. After a seasonally soft August, page views picked up solidly in September and October, suggesting this strength should translate into a third-quarter product revenue beat.

Multiple sources expect the company to beat estimates by 3% or more, implying 30% year-over-year growth in product revenue. This would represent continued momentum in a business already seeing robust expansion. Additionally, expectations point toward fourth-quarter guidance approximately 1% above consensus estimates.

The encouraging signs extend beyond just usage metrics. Market commentary suggests interest in Snowflake's processing and development platform is growing, which would represent an expansion beyond the company's core data warehousing business into higher-margin services.

Snowflake currently trades with a favorable technical configuration. The stock has found support and shows improving momentum indicators following the recent sector-wide consolidation in large-cap technology names.

From a sentiment perspective, investors appear modestly constructive but not excessively optimistic heading into the report. This creates asymmetric upside potential if the company delivers the expected beat-and-raise quarter.

Based on historical patterns, when Snowflake has delivered both an earnings beat and positive guidance, the stock has moved higher consistently. The current setup suggests this pattern could repeat, particularly given the strength in underlying demand indicators and positive industry commentary.

We view Snowflake as an attractive opportunity for investors seeking exposure to the AI infrastructure theme through a company with demonstrable revenue growth, expanding market opportunity, and positive momentum in key performance indicators.

We maintain a net long position in the overall stock market, reflecting our constructive outlook for equities in the current environment. The combination of strong corporate earnings, accommodative Federal Reserve policy despite recent cautious rhetoric, and continued strength in technology sector fundamentals supports our positive bias.

Within the equity portfolio, we hold long positions in Snowflake, American Eagle Outfitters, and small positions in Nvidia and nCino. These holdings reflect our conviction in companies positioned to benefit from secular growth trends while offering attractive near-term catalysts.

The thesis for our equity holdings centers on several key themes we expect to drive market performance in coming months. Technology infrastructure spending remains robust, with major cloud providers indicating sustained capital expenditure plans for AI and data center buildouts.

Database and data management companies like Snowflake benefit directly from the increasing need to store and process massive amounts of data required for AI applications. The fundamental demand drivers appear strong and likely to persist as AI adoption accelerates across industries.

The recent technical consolidation in large-cap technology stocks appears healthy after the strong advance from spring lows. We view near-term weakness as potential opportunities to add to positions rather than signals to reduce exposure, provided fundamental trends remain intact.

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