The Market Outlook for the Week Ahead, or The Tail Wagging the Dog

You can be forgiven for thinking that the stock market has become manic-depressive, which, over the last two trading days, ended up violently flat.

On Thursday, the Dow Average ($INDU) shed 1,100 points in the wake of Nvidia’s blockbuster earnings report. NASDAQ (QQQ) stocks saw the widest range since April 2 Liberation Day, when stocks crashed, and we were all liberated from our money.

The next day, stocks recovered their losses when Fed Governor John Williams indicated that a quarter-point rate cut at the upcoming December 10 meeting was in order. Williams isn’t just any old Fed governor. He is the president of the New York Fed, whom the chairman has traditionally used to leak future changes in Fed policy. That was enough to take the Fed fund futures from a 30% probability of a rate cut in December to 70% in an hour. It had been as high as 90% in October.

They would be right to do so. The job markets are clearly headed for a recession, with the headline Unemployment Rate adding a tick to 4.4%. Far more concerning were the massive downward revisions to previously reported jobs figures for August and September of 33,000, which now seems to be a regular occurrence.

My own Mad Hedge AI Market Timing Index hinted that something big was afoot, reaching a seven-month low, and the Volatility Index ($VIX) hit a six-month high at $28, in “STRONG BUY” territory. Many technical services have the market bottoming today or this coming week, which, because of Thanksgiving, only has 3 ½ trading days.

The good news is that almost all Q3 earnings are out. Reports came in better than expected because the forecasts were made during the dark days of April, when it looked like the world was ending. But the market reaction to these great earnings was the worst I can ever remember, almost all uniformly down 10%, with the exception of Google (GOOGL) and Apple (AAPL), two of my favorite big tech stocks. The market might not survive earnings getting any better.

Watching the markets constantly, as I tend to do, I can’t help noticing that stocks and Bitcoin have been trading together tick for tick. While the S&P 500 gave up 5%, Bitcoin shed 36%.

Is the tail wagging the dog?

I always thought this would happen within the crypto market. While Bitcoin issuance halves every four years, the growth of crypto derivatives has been exponential, at least 100X the underlying.

When the total crypto universe was only $2 trillion, and nobody cared if it went to zero. Now at $4 trillion, the damage is spreading to the rest of the financial system.

The selloff in Bitcoin over the last month may be due to a software glitch similar to the 1987 “Portfolio Insurance” where selling automatically begets more selling. That ultimately led to a one-day 20% dive in the Dow Average, which I remember all too well. I was in Paris that day, and I used a client’s phone to call Morgan Stanley (MS) and try to buy the close. A female clerk picked up the phone and burst into tears, and smashed the phone on the floor. My order didn’t get done, as the ticker was then running two hours late.

The current program was unleashed by a crypto trader called “BDL” and caused cascading margin calls in both crypto and stocks. This has given us the worst November for stocks since the 2008 Great Financial Crisis. My downside target for Bitcoin is the April low of $77,500, where we should bounce hard, taking stocks up as well. It worked in April.

The last plunge of this magnitude took place in 2022 and lasted eight weeks, and we are six weeks into this one. We also came within $2,500 of the $77,500 cost of mining a Bitcoin. Below that, selling historically dries up because no one wants to mine at a loss. Of course, that still leaves crypto investors selling, which can continue unabated, as it did in 2022. That’s another reason why a serious rally in US stocks may be at hand.

What do you buy?

Refer first to my list of favorites: Goldman Sachs (GS), Morgan Stanley (MS), Rocket Mortgage (RKT), Netflix (NFLX), Amazon (AMZN), Alphabet (GOOGL), and Apple (APPL).

So far in November, I am down -1.33%. That takes us to a year-to-date profit of +58.00%. My trailing one-year return stands at +61.87%. That takes my average annualized return to +50.82%, and my performance since inception reaches a new all-time high of +809.89%. These are all non-compounded numbers.

My three November long positions in Netflix (NFLX), Goldman Sachs (GS), and Zoom (ZM) all expired at max profit. I have another long in Morgan Stanley (MS). I stopped out of Blackrock (BLK) with a small loss. That leaves me 10% long and 90% in cash awaiting the next market bottom, where I will try to buy into the year-end rally.

I am betting big that the interest rate-sensitive trade will return. With the deep in the money call spreads I use, we should make a maximum profit on every trade, whether we grind sideways before the big move, or not.

Some 63 of my 70 round-trip in 2023, or 90%, were profitable. Some 74 of 94 trades were profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.

Try beating that anywhere.

Some 119,000 Jobs were Gained in September, but 33,000 we lost in the September revisions. The Unemployment Rate rose 0.1% to 4.4%, a 2025 high. That dashed the hope for a Fed interest rate cut in December and prompted a 1,100-point plunge in the Dow Average. Uncertainty is running rampant, increasing market volatility.

Existing Home Sales Rise 1.2% in October. Sales of previously owned homes in October rose to 4.1 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors. Sales were up 1.7% year over year. The inventory of homes for sale fell to 1.52 million units, down 0.7% from September, although still nearly 11% higher than a year earlier. At the current sales pace, there is a 4.4-month supply, still considered lean.

Nvidia Beats, Forecast Raised, but only managed a 3% gain in the stock, then a sharp decline. Its Big Three customers are still buying with both hands. “Blackwell sales are off the charts, and cloud GPUs are sold out,” CEO Jensen Huang said in a statement. “The AI ecosystem is scaling fast — with more new foundation model makers, more AI startups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once. Sales in the data-center segment, which accounts for a majority of Nvidia’s revenue, grew to $51.2 billion in the quarter ended October 26. Analysts had expected sales of $48.62 billion, according to LSEG data. Still, analysts and investors widely expected the underlying demand for AI chips, which has powered Nvidia’s results since ChatGPT’s launch in late 2022, to remain strong. Huang said last month the company has $500 billion in bookings for its advanced chips through 2026.

Bureau of Labor Statistics Cancels October Jobs Report, instead incorporating those payroll figures into the November report, set to be published after the Federal Reserve’s final meeting of the year. The leaderless BLS couldn’t collect October household data, which informs key statistics like the unemployment rate, as a result of the record-long government shutdown. The agency figures data couldn’t be gathered retroactively. The November employment report will be published on Dec. 16, more than a week later than originally scheduled.

$1.2 trillion Lost in Crypto in Six Weeks, after Bitcoin bounced off $80,000 last night. The risk-sensitive cryptocurrency has lost all this year’s gains and is now around 26% below a peak above $126,000 in October. It was last up nearly 1.9% at $93,532, after slipping as low as $89,286.75. Market participants said a combination of doubts around future U.S. interest rate cuts and the risk-averse mood in broader markets, which have wobbled after a long rally, was dragging down crypto. Avoid all crypto.

Margin Calls on Bitcoin are Forcing Selling of Tech Stocks, which explains the massive 25% down moves matching Bitcoin’s own 36% swan dive. Avoid crypto, as it hasn’t found a bottom yet. It has most affected top brokerages like Robinhood (HOOD), Coinbase (COIN), and Interactive Brokers (IBKR). Robinhood has soared nearly 225% in 2025, while Interactive Brokers is up about 50%, which means they could have more room to fall.

Strategy Buys More Bitcoin, taking its holdings up to 640,418 bitcoin, worth around $70 billion. Strategy Inc. (MSTR) sold €775 million (US$898 million) preferred shares at 80 cents on the euro earlier this month. Now, with Bitcoin prices in freefall, the few traders offering prices on the stock are willing to sell at about 78 cents and buy a couple of cents lower, according to two people familiar with the matter, who asked not to be named as the prices were shared privately. Strategy has been doubling down despite the recent crypto rout. The firm bought $835.6 million of Bitcoin in the seven days ended Sunday, the largest purchase by the firm since July. The company appeared to finance the majority of the purchases with the proceeds of the euro preferred offering.

Jobless Claims Hit Two-Month High. Continued claims for jobless benefits – those receiving benefits beyond an initial week of relief – rose to 1.957 million in the week ended October 18, updated figures posted to a Labor Department website showed on Tuesday. That was up 10,000 from the prior week and was the highest since early August. It was up notably from the 1.916 million level in the week ended September 13, the last week of data to have been reported prior to the start of the shutdown on October 1.

Berkshire Hathaway Takes Major Stake in Amazon. The value of that stake was $904 million by the closing bell on Wednesday. Despite the sizable headline figure, the position doesn’t put Berkshire near the top of Amazon’s biggest shareholder list. The stake represents about 0.1% of Amazon’s outstanding equity. The size of the position, however, had not previously been reported to the public. If it’s good enough for Warren, it’s good enough for me. Buy (AMZN) on dips.

China iPhone Sales Jump 22%. Sales of iPhones in China rose 22% from year-earlier levels in the first month after the iPhone 17 series launched, even as the broader market softened, a private survey showed on Friday. The new lineup drove most of Apple’s smartphone sales in China in the period from the September 19 launch, with the 17 series accounting for nearly four-fifths of units sold to consumers, according to the data from research firm Counterpoint. Buy (AAPL) on dips.

My Ten-Year View – A Reassessment

We have to substantially downsize our expectations of equity returns over the next four years. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.

On Monday, November 24, at 8:30 AM EST, the Dallas Fed Manufacturing Index is out.

On Tuesday, November 25, at 8:30 AM, the ADP Private Jobs Report is announced.

On Wednesday, November 26, at 8:15 AM EST, the Durable Goods are disclosed.

On Thursday, November 27, markets are closed for Thanksgiving

On Friday, November 21 GDP Growth Rate is published….maybe. Markets are only open half a day today and close at 1:00 PM EST.

At 10:00 AM EST, we obtain the Baker Hughes Rig Count.

As for me, this is not my first Russian invasion.

Early in the morning of August 20, 1968, I was dead asleep at my budget hotel off of Prague’s Wenceslas Square when I was suddenly awoken by a burst of machine gun fire. I looked out the window and found the square filled with T-54 Russian tanks, trucks, and troops.

The Soviet Union was not happy with the liberal, pro-Western leaning of the Alexander Dubcek government, so it invaded Czechoslovakia with 500,000 troops and overthrew the government.

I ran downstairs and joined a protest demonstration that was rapidly forming in front of Radio Prague, trying to prevent the Russians from seizing the national broadcast radio station. At one point, I was interviewed by a reporter from the BBC carrying this hulking great tape recorder over his shoulder, as I was the only one who spoke English.

It seemed wise to hightail it out of the country, post haste, as it was just a matter of time before I would be arrested. The US ambassador to Czechoslovakia, Shirley Temple Black (yes, THE Shirley Temple), organized a train to get all of the Americans out of the country.

I heard about it too late and missed the train.

All borders with the West were closed and domestic trains shut down, so the only way to get out of the country was to hitchhike to Hungary, where the border was still open.

This proved amazingly easy as I placed a small American flag on my backpack. I was in Bratislava, just across the Danube from Austria, in no time. I figured worst case, I could always swim it, as I had earned both the Boy Scout Swimming and Lifesaving merit badges.

Then I was picked up by a guy driving a 1949 Plymouth who loved Americans because he had a brother living in New York City. He insisted on taking me out to dinner. As we dined, he introduced me to an old Czech custom, drinking an entire bottle of vodka before an important event, like crossing an international border.

Being 16 years old, I was not used to this amount of high-octane 40-proof rocket fuel, and I was shortly drunk out of my mind. After that, my memory is somewhat hazy.

My driver, also wildly drunk, raced up to the border and screeched to a halt. I staggered through Czech passport control, which duly stamped my passport. I then lurched another 50 yards to Hungary, which amazingly, let me in. Apparently, there is no restriction on entering the country drunk out of your mind. Such is Eastern Europe.

I walked another 100 yards into Hungary and started to feel woozy. So, I stumbled into a wheat field and passed out.

Sometime in the middle of the night, I felt someone kicking me. Two Hungarian border guards had discovered me. They demanded my documents. I said I had no idea what they were talking about. Finally, after their third demand, they loaded their machine guns, pointed them at my forehead, and demanded my documents for the third time.

I said, “Oh, you want my documents!”

I produced my passport. When they got to the page that showed my age, they both started laughing.

They picked me and my backpack up and dragged me back to the road. While crossing some railroad tracks, they dropped me, and my knee hit a rail. But since I was numb, I didn’t feel a thing.

When we got to the road, I saw an endless stream of Russian army trucks pouring into Czechoslovakia. They flagged down one of them. I was grabbed by two Russian soldiers and hauled into the truck with my pack thrown on top of me. The truck made a U-turn and drove back into Hungary.

I contemplated my surroundings. There were 16 Russian Army soldiers in full battle dress, holding AK-47s between their legs, and two German Shepherds, all looking at me quizzically. Then I suddenly felt the urge to throw up. As I assessed that this was a life and death situation, I made every effort to restrain myself.

We drove five miles into the country and then stopped at a small church. They carried me out of the truck and dumped me and my pack behind the building. Then they drove off.

The next morning, I woke up with the worst headache of my life. My knee bled throughout the night and hurt like hell. I still have the scar. Even so, in my enfeebled condition, I realized that I had just had one close call.

I hitchhiked on to Budapest, then to Romania, where I heard that the beaches were filled with beautiful women. My Italian let me get by passably in the local language.

It all turned out to be true.