The market has been slammed so far this year with seemingly bad news.
First, it was the introduction of DeepSeek which sent AI and Semiconductors crashing.
Then, further tariff talk weighed heavily on the market.
And yet despite these two shockwaves, interestingly, the stock market has fought its way back to all-time highs.
This leads me to believe we are again in a rolling bull market, where weakness in certain sectors just translates to strength in others.
Put another way, big investors aren’t taking profits and going to cash, they’re redeploying those profits into other areas of the market.
But if you just watched the headlines, you may not know it.
As noted above, news out of China of the breakthrough of DeepSeek sent AI stocks down dramatically. That was a scary Monday morning. Yet despite those concerns for growth stocks, encouragingly software, cloud and cybersecurity stocks broke out in the days following the introduction of DeepSeek. Take for example …
CRWD is at a new high
PLTR ramped higher on earnings
DASH looks spectacular
APP, IBM … you get the picture, I could list plenty of growth stocks that have shaken off the DeepSeek news and are trading at new all-time highs.
Next up on the worry list was President Trump’s threats of tariffs on Canada, Mexico and China, which sent S&P futures tumbling. Fast forward a couple days and the indexes have regained those losses, and again, countless stocks are breaking out, in a variety of sectors. I’m looking at …
ABBV went nuts on earnings
SPOT is a growth leader that exploded higher on earnings
GE, SBUX and RCL are hugging their recent highs
DRI and EAT are two restaurant stocks that look fantastic
IBKR in the broker space is at a new high.
Essentially, despite worries, there are also a lot of positive signs for the market.
If I thought the S&P 500 was headed higher this year, I might buy this call to play a strong 2025:
Buy to Open the SPY December 600 Call (exp. 12/19/2025) for $51 or less
And while I am bullish, it is possible that the tariff situation could go sideways, or the weight of the DeepSeek news could continue to hurt the Semiconductors, or a new unknown could even derail the market’s momentum.
And if I was worried about those scenarios, or just wanted to hedge my portfolio I might look at this put buy:
Buy to Open the SPY December 600 Put (exp. 12/19/2025) for $24 or less
Stepping back, I’m encouraged by the rolling strength of the market despite the many worries. And should the market break out from its early 2025 choppy ways, I could see adding any of the stocks listed above to the Cabot Options Trader portfolio very soon.
