by Jason Bodner
December 9, 2025
Led Zeppelin’s great Rain Song said: “Upon us all a little rain must fall.” Decades before that classic song, the Ink Spots and Ella Fitzgerald delivered the same message: “Into each life some rain must fall…”
November, like many recent months, was an uncharacteristically stormy month. And storms can be so powerful that they can briefly create anti-matter. Lightning accelerates electrons so violently that they emit gamma-rays, which form positrons – even if for only a fraction of a second.
Markets can behave the same way. Normal-looking turbulence can mask deeper forces. November was a perfect example of how something appears threatening may have a much simpler explanation in the data.
The good news is that I’m here to tell you that the storm has passed.
November is usually the strongest month. Since 1990, nearly three-quarters of Novembers (74.3%) have finished positive with the S&P 500 averaging a 2.45% gain, with December adding another +1.28%.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This year seems to have broken these patterns. For most of November, the tape looked heavy, and sentiment was negative. Then Thanksgiving week arrived. In those thinly traded quiet sessions, pressure lifted and buyers stepped in just enough to push the Dow, the S&P 500, and the Russell 2000 back into the green for the month. Only the NASDAQ Composite failed to join the late November rebound.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
November’s early weakness was concentrated in growth areas. Technology, Discretionary, and Industrials struggled, usually bull-market engines. Their volatile action created concern that something broader was breaking down. The financial media pushed the idea that the AI trade was fading and overspending and limited data-center capacity made valuations unsustainable. But, as is often the case, the simplest explanation is not the one that generates the most clicks. Headlines often chase emotion rather than facts.
I believe the real cause was not fundamental deterioration or an AI unwind. It was forced liquidation in the crypto-currency world that spilled into equities. Bitcoin and other major crypto-currencies fell sharply, and in a highly levered space, those drops triggered margin calls, so traders are forced to raise cash any way they can. The fastest way is to sell their best-performing, most liquid positions. That is exactly what we saw.
Then, just as quickly, pressure vanished. November 20 marked the last day of heavy outflow. Starting the next session, consistent inflow returned. From October 29 through November 20, only three of 17-trading days saw inflow exceed outflow. It felt as if risk managers across several firms had instructed traders to cut exposure before Thanksgiving, and once that deadline passed, the selling simply stopped.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The Big Money Index (BMI) confirms this shift. It had fallen sharply into the mid-forties, signaling stronger selling pressure, but it recently bounced back to nearly 50. That may not sound dramatic, but the direction change is what matters. A rising BMI is one of the clearest signals that forced selling has ended and buyers are stepping back in. Trading volumes, which were muted during the holiday stretch, also recovered. When real money returns to the market with conviction, volume usually leads the way.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
ETF flow add another layer of confirmation. During the worst of the selling, outflows were heavily concentrated in crypto-currency related ETFs. Once that pressure eased, we began to see inflow return to small-caps, mid-caps and international stocks. That shift aligns perfectly with an environment where traders had been selling winners to cover losses, and they are now rebuilding exposure once forced selling stopped.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Flow patterns by market-cap show the same reversal. Before November 20, small-cap and mid-cap stocks faced significant pressure. After that, capital began rotating back in.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Sector level flow also flipped. Energy suddenly jumped to the top of the rankings due in part to XLE hitting fresh 6-month highs, but there weren’t heavy outflows to drag it down.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Technology, Industrials, Discretionary, and Financials endured the steepest draw-downs and then staged the sharpest rebounds. This is typical when selling is mechanical rather than driven by weak fundamentals.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Given this context, the question becomes, Which story is more believable? Did the AI trade suddenly collapse, or did a leveraged group get hit hard in crypto-currency and needed to liquidate profitable positions?
Charts of stocks with heavy crypto-currency exposure, such as MicroStrategy, make the answer fairly obvious. Someone, somewhere, blew-up, and their losses spilled into the equities that had performed best all year.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The good news is that the tail-winds are lining up. The probability of a December rate cut has increased. Lower taxes from the Big Beautiful Bill are already improving bottom line results. Earnings are excellent: for Q3, with 83% of S&P 500 companies beating earnings and 76% beating revenue. These are strong numbers, justifying the market’s resilience. And remember: December is a seasonally strong for stocks.
One Warning: Mid-Term Election Years (Like 2026) are Generally Flat
I’m optimistic about the near-term back-drop for stocks, but I also must acknowledge a caveat. Next year is a mid-term election year, which is historically the softest year in the 4-year presidential cycle.
Fewer than half (7 of 16-mid-term years since 1960) have been positive.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
One other caveat: A review of the events in most of these years, reveals the fact that the biggest declines were tied to significant macro-events rather than the election cycle itself, such as:
- The Kennedy slide of 1962 was driven by recession fears and the Cuban Missile crisis.
- The 1966 decline came from a credit crunch caused by aggressive Federal Reserve tightening.
- The severe selloff in 1974 stemmed from inflation, Watergate, the end of the Bretton Woods system, and the OPEC oil shock.
- In 2002, the dot com collapse, accounting scandals, and post 9/11 uncertainty crushed confidence.
- And in 2022, markets struggled under the weight of inflation, rapid interest rate hikes, supply chain disruptions, war in Ukraine, and China’s lock-down policies.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Mid-term years suffer when such shocks occur, but I don’t currently see a comparable shock ahead in 2026. Instead, the market shook off a sharp but temporary forced liquidation, recovered, and now show signs of strengthening flow and renewed demand.
The storm was real, but it passed. And just like storms that briefly generate anti-matter before fading, the November turbulence revealed its hidden force only in hindsight.
There is an old Chinese proverb: “The wise prepare for rain long before the first cloud appears.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
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2026 Is Shaping Up to be a Spectacular Year
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“Affordability” Takes Center Stage For 2026
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Storms Make the News, but Clear Skies are the Norm
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Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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