Image Source: Unsplash
 

The bulls certainly fought back with vengeance the last two days after Thursday’s ugly reversal rout. That’s not surprising given the pullback got to the 5% mark during a time of year when larger declines are rare, save 2000, 2007 and 2018. And let’s not forget that so many investors are still chasing risk assets from having panicked and sold right at the tariff tantrum lows in April. The great performance chase has been on throughout the past few months.
 

Last week, I mentioned that a close above Thursday’s high would confirm that the pullback was over and a move to the old highs was very likely. I also said it would be late and not the bell ringer at the bottom. Nothing has changed in that regard. Before I am asked if the low is in, my answer is that I do not have high conviction. Pieces are falling into place, but in a perfect world, which we seldomly get, I would like to see one more decline below the recent lows to act as a final flush before a rally to new highs into 2026.
 

The Nasdaq 100 is above, which houses all of the sexy and popular AI stocks. And it looks very similar to the S&P 500. Instead of a 5% pullback, this index was down almost 8%. My analysis is the same.
 

Next, I want to share the Russell 2000, which is where small-cap companies live. Casual observers will notice a larger pullback from the October peak. Also, last Thursday’s big reversal decline was noticeably lower than the October spike low and weaker than the S&P 500 and Nasdaq 100. Since April, I have written about the small caps versus large caps, and for this trade to continue, we will need to see the small companies lead into 2026, which is what seasonal patterns suggest.
 

Finally, this week is very seasonally strong. Could the market have borrowed some upside already? Sure, but I wouldn’t get carried away. Two big rally days could easily lead to a weak morning or mild pullback day. For the super short-term and nimble, I would buy weakness with a very tight leash.

If I don’t publish tomorrow, which I won’t unless there is a big market move, I wish you a happy and meaningful Thanksgiving surrounded by loved ones and lots of football.

On Friday, we bought PCY, OIH, more VKTX, and more RSPU. On Monday, we bought XLE, EMB and JNK.

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