Fed Division, Global AI Acceleration, and Market Structure Holding Near Highs

Pre-Market Snapshot

Light volume persists as we move through the final trading days of the year. All three major indices remain near all-time highs. Despite ongoing debate around AI capex returns, price action continues to respect trend structure.

We have established:

• A confirmed higher low

• A clearly defined uptrend line

• Bullish gaps supporting momentum

Recent upside absorbed prior heavy-volume selling. Sellers were overtaken, even though upside volume has not expanded meaningfully. As long as price holds above the trend line — even with a test — the probability favors continuation. The uptrend remains intact until proven otherwise.

An unforeseen catalyst would be required to materially alter the broader market narrative.

News To Know

The Fed’s Identity Crisis

Federal Reserve cut rates for the third time in 2025, bringing the benchmark range to 3.50%–3.75%. The decision exposed the deepest internal split since 2019.

Three policymakers dissented. Forward projections for 2026 range from zero cuts to two cuts, with the median calling for just one. Inflation is easing and growth appears firm, but internal staff analysis suggests payrolls may be overstated by roughly 60,000 jobs per month — implying underlying job growth could already be negative.

Four new regional bank presidents rotate into voting roles in 2026, increasing uncertainty. Markets currently price an 84% probability of no action at the January meeting.

China and the Humanoid Robotics Push

China is aggressively scaling humanoid robotics while the U.S. debates regulation. Over 150 firms are involved, with several targeting mass production in 2026 — potentially ahead of Tesla’s Optimus timeline.

Demographics are the driver. Declining birth rates and an aging population are forcing automation. RBC Capital Markets projects a $9 trillion global market by 2050, with China potentially capturing over 60%.

Key players include UBTech Robotics, AgiBot, Unitree, and Xpeng. Cost advantages from manufacturing scale are significant, with UBTech projecting 20–30% annual cost declines.

Constraints remain:

• Prototype costs at $150k–$500k

• Viability requires $20k–$50k pricing

• High reliance on U.S. chips, particularly from Nvidia

China’s own planners have warned of bubble risk, highlighting the gap between hype and near-term feasibility.

Meta’s $2 Billion AI Bet

Meta acquired Manus, a Singapore-based AI agent firm, for over $2 billion. Manus reached a $125M annualized revenue run rate within eight months.

Manus develops AI agents for research, coding, and data analysis, claiming performance advantages over competing deep-research tools. The acquisition aligns with Meta’s broader strategy of consolidating AI talent and infrastructure following significant investments earlier in the year.

The Manus team will continue operating its subscription platform while integrating into Meta’s AI roadmap.

Trump and Netanyahu: Strategic Friction

Donald Trump and Benjamin Netanyahu maintain strong public alignment, but private disagreements persist.

Key tensions:

• Iran: Trump remains open to diplomacy, while Israeli officials believe Iran is actively rebuilding nuclear capacity.

• Gaza: The October cease-fire remains stalled, with no clear movement toward disarmament or governance transition.

• Legal pressure: Trump has publicly urged a pardon for Netanyahu, which Israeli President Herzog’s office has disputed as premature.

The alliance remains intact, but priorities are increasingly divergent.

Sector Rotation
Volume remains light, but indices continue to hold near highs. Financials are consolidating after several strong weeks and are an area of focus heading into the new year.

Financials to Watch:

• Banks and regional banks

• Asset management firms

Names pausing near trend support include WFC, C, and PNC. Best-case scenarios involve buyers stepping in near established support levels.

Technology

participation is expanding, but the AI thesis remains a question of valuation rather than structure.

Consumer Cyclical

Twenty-two stocks show bullish stacked order flow with optimal entries. Two key names:

• VSCO

• ABNB

Airbnb is currently pausing with a double inside daily candlestick setup. This is a two-step trade structure — initial positioning only becomes actionable on a confirmed resistance break.

Industry Groups

Bullish

• Asset Management: APO, STT, TPG, CG

• Airlines: DAL, UAL, LUV, ALK

• Software Infrastructure: PLTR, SNPS, TWLO, MDB, RBRK

• Discount Stores: TGT, DG, DLTR

Bearish

• Diagnostics & Research: A, DGX

• Oil & Gas Refining & Marketing: MPC, DINO, PARR, DK

• Auto Parts: ORLY, MOD, AAP

• Health Information Services: VEEV, DOCS, WAY

Day Trading Pro

Daily Watchlist: 

AMD, GOOGL, AMZN, COIN, JPM, TSLA, CVX, XOM, AAPL, BA, CAT, GE, NVDA, WMT, MU, ROKU, PLTR, RDDT

Stock in Play: MU

Micron demonstrated sustained relative strength, holding above VWAP throughout the session. Pullbacks to VWAP consistently found support. The cleanest opportunity came from a consolidation breakout, not the initial momentum push.

Price maintained higher lows, respected the 10-period SMA, and delivered a textbook example of why the Profit Maximizer is structured as a two-step exit.

What Matters Next

• Trend structure remains intact

• Reference levels are clearly defined

• Patience is favored over aggression

• Pullbacks remain higher-probability than breakouts

Markets continue to reward discipline.

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