Yesterday’s session was very encouraging, with investors flocking to other market niches, including Health Care (XLV), which remains hot in November. The significant individual action was among retailers outside the S&P 500 (SPX).

Coiled Springs

One of the more counterintuitive aspects of the market is that it moves in individual stocks and, occasionally, sectors are entirely at odds with macro data and popular opinion. For instance, most observers agree there are cracks in the consumer, with 10-20% doing almost all the heavy lifting, while the rest struggle to pay monthly bills.

Higher-end consumers have indeed been trading down, but the reactions we are seeing in the past week to retailer results point more to way-over-sold stocks. Yesterday, Kohl’s (KSS) rose 43%, and Abercrombie & Fitch (ANF) rose 37%, and after the close, Urban Outfitters (URBN) rocketed 17% on its earnings results.

Suddenly, the same SPDR S&P Retail ETF (XRT) chart I used last week to reflect consumer weakness has staged a monster reversal, and is poised to move even higher. This is more about “coiled springs” than “strong” consumers.

Heat Map

Nvidia (NVDA) and Oracle (ORCL) are under pressure, as Alphabet (GOOG/L) has taken the spotlight. I think both are oversold, but I’m only spying the former for entry as a “value stock.”

However, 85% of the names on the S&P 500 traded higher. It could have been better, but oil stocks tumbled as crude oil continues to get flushed.

Only growth finished lower, but it staged a late rebound, as buyers found opportunities in all niches.

Small-Caps Come Up Big

The iShares Russell 2000 (IWM) “Small Cap” Index climbed back above its 50-day moving average, but the higher-quality S&P 600 Small Cap Index (SML) was even more impressive, bouncing off its 200-day moving average with vigor, as 93% of its components finished higher.

A “3 handle?”

The market in general, and small-caps in particular, got an extra pep in their step, as the ten-year bond yield (TNX) edged ever so close to breaking under 4.0%.

Shaken, Not Stirred

The market is still in “extreme fear” mode, but that could change ahead of Thanksgiving.

Today’s Session

The day before Thanksgiving, we search inside and look around at our blessings.

It’s a time when we try to overlook our own pettiness by evaluating family, friends, neighbors, coworkers, and the world in general.

Then we go to dinner and argue about the things we feel deeply about, and it only reloads the pettiness we shed 24 hours earlier.

The big picture has stopped uniting us, like being Americans.   

For investors, the big picture is a stock market near all-time highs, the Fourth Industrial Revolution, and strong tailwinds going into 2026.

And yet the leading story on any given day is that the end has begun or is right around the corner.

This brings me to the biggest bubble of them all: persistent pessimism.

Some of this is human nature, but these days it's mainly from the media, which is committed to a campaign of dread and anxiety.

This isn’t the old newspaper adage: “if it bleeds, it leads.”

This is the new financial media adage: “one day it will bleed, and it could be a gusher.”

I give investors a lot of credit for hanging in there with this kind of non-stop water torture campaign.

A lot of this has to do with politics.

The media can’t get enough of the affordability crisis now, but I didn’t hear the term when Joe Biden was president.

I talked about housing affordability, which was and still is a problem, but it's improved a lot.

30-year fixed mortgages are 0.73 percentage points lower.  The 52-week high was 7.26, and it's now 6.20.

Home prices are coming down, too.

Meanwhile, crude oil and gasoline, eggs, lumber, frozen orange juice, and many other items have seen sharp price declines – but the new proxy for prices is beef and veal.

Of course, people move the way they feel.  The inflation shock hasn’t gone away and can only be cured with price increases slowing to a crawl as wages catch up.

Still, this runaway pessimism will have a significant economic impact.

Many surveys rank nations by happiness. Typically, Scandinavian countries top the list, followed by other developed nations. A review of the wording in those surveys makes the results specious – like comments on climate change.

The best way to measure happiness and hopefulness is through fertility, and on that score, wealthy nations are committing suicide, which will initially reveal itself economically.

Pessimism and hopelessness are a luxury of wealthy nations.

The woe-is-me act could become self-fulfilling.

As for investors, I think Howard Marks put it best.

Most market skeptics are also perma-bears. But true skeptics should recognize when there is too much pessimism and, in turn, be optimistic.

I’m licking my chops.  Not just thinking about tomorrow’s dinner, but also about how quickly stocks are punished in this environment.  I can’t wait to sink my teeth into the pessimistically oversold opportunities.

Happy Thanksgiving.

Comments

Happy Thanksgiving Charles, blessings to you and yours. Thank you for all you and your team do! Greg Staffn on 11/26/2025 11:38:12 AM

Blessed Thanksgiving to you and yours, Charles. Thanks for all you do. Gene Morden on 11/26/2025 4:44:37 PM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.