STRONG MOMENTUM - RISK ON

S&P 500 (SPY): $694.46 (+1.22% daily, +2.73% weekly) NASDAQ (QQQ): $628.6 (+1.82%) VIX: 18.16 10-Yr Yield: 4.27% Gold (GLD): $445.09 Fear & Greed Index: 49.0 (Neutral)

Today's session saw strong upward momentum in the major indices, with the S&P 500 climbing above significant technical resistance levels. The NASDAQ's robust growth was driven by gains across major tech stocks, signaling renewed investor confidence in the technology sector. The VIX remains subdued at 18.16, reflecting a relatively calm market sentiment amidst continued economic expansion. A healthy yield curve with the 10-year yield at 4.27% further supports equity market valuations by keeping concerns of an economic downturn at bay.

• The AB-Ai proprietary SPY gauge stands at 75.3, indicating a strong bullish momentum that could propel further rallies. • With the S&P 500 trading well above its previous resistance of $690, there is potential for additional upside. • Investor sentiment has shifted in favor of risk assets, as evidenced by the Fear & Greed index at neutral (49.0) and a weekly S&P gain of +2.73%. • Over the next quarter, the sustained momentum in technology and consumer discretionary sectors suggests continued bullish prospects.

• The potential for market retracement exists if the S&P 500 fails to maintain support at the $680 level. • A surge in volatility could occur if the VIX rises above the 25 threshold, which would signal increased market uncertainty. • Technical concerns arise if momentum falters and the 10-year yield surpasses 4.5%, which could pressure equity valuations. • Geopolitical tensions remain a latent risk, with any escalation likely to trigger flight-to-safety trades.

Given the strong bullish outlook, portfolios should be positioned to overweight equities, particularly within the technology and consumer discretionary sectors, which have demonstrated robust momentum. A tilt towards large-cap growth stocks, benefiting from the current economic expansion, may enhance portfolio returns. However, it would be prudent to maintain a defensive allocation to hedge against volatility spikes, with 10% of the portfolio in bonds and gold to serve as a buffer. Carefully monitor risk-adjusted returns while keeping a close watch on interest rate developments, adjusting allocations as necessary to preserve capital.

• S&P 500: $680 support level, $700 resistance level - Breaching these could dictate short-term market direction. • VIX: 15 floor, 25 ceiling - A move outside this range would suggest shifting investor sentiment. • NASDAQ level of 650 as a tactical pivot point, indicating growing or waning tech confidence. • 10-year yield of 4.5% as a critical threshold, influencing broader market valuations and fixed income strategies.

Despite prevailing bullish sentiment, astute investors should remain vigilant for signs of market overheating. An appropriate tactical pause could involve incrementally increasing cash allocations, preparing to capitalize on any volatility-induced opportunities. As always, position for scenarios not currently priced in, maintaining strategic flexibility to preserve capital and exploit contrarian opportunities.

NEXT REVIEW: Tuesday, December 23, 2025