The Monday Morning Playbook: Week of December 8, 2025

Good morning,

The story over the past month and a half has been the rotation out of tech and previous winners and into other sectors.

My biggest concern looking ahead to 2026 has been that staples and healthcare would be the biggest beneficiaries of that rotation, a late cycle message that would warrant more defensive positioning.

And following pullbacks over the past few weeks, both of those sectors do look attractive and like they’re putting in long-term relative performance turns.

But it’s hard to get outright bearish when banks and small cap energy stocks are breaking out to new highs. That’s not an environment that screams recession. If anything, it says economic acceleration, and maybe inflation.

That’s the message from the bond market too, with the US 30-year yield breaking out to a 3-month high last week. I’ve favored an overweight to duration, but I’m changing my mind here and see more short-term upside for rates.

With little change to Fed fund futures last week, all this begs the question: Is the market sniffing out something besides a cut to the Fed funds rate this Wednesday?

It certainly seems like it, but by the time the story or narrative is known, the bulk of the money has already been made. Investors should focus on the stocks and industries making new highs NOW, rather than the ones that were leading us earlier in the year.

This week’s report will review:

• Key levels on the S&P 500

• Breadth

• Two important groups breaking out

• The bear case for bonds

• Major index technicals

• Single stock charts

• and more!