Will a Year-End Rally Start Tomorrow?

Markets are pricing roughly a 90% probability of a 25-basis-point Fed cut at tomorrow’s FOMC meeting; Louis Navellier argues the move is justified by weakening labor (ADP -32,000 in November), real-estate disinflation and a sharp fall in Conference Board consumer confidence to 88.7 from 95.5. Luke Lango notes a modest December uptick in University of Michigan sentiment and a drop in one-year inflation expectations to 4.1% from 4.5%, arguing that a rate cut amid sticky upper‑2% inflation could catalyze a year‑end equity rally even if Fed guidance remains cautious—he and colleagues point to strong recent performance from their promoted Power Portfolio (31.6% in 2025 vs. Nasdaq 18.5%, S&P 14.3%). On crypto, Lango says last week’s Bitcoin crash was leverage-driven and the purge has cleared the way for buyers; a decisive reclaim of the 50-week moving average near ~$100k would likely trigger institutional flows and a 2026 structural bull cycle, while failure at that level would be a distinctly bearish signal.

Analysis

Markets were pricing roughly a 90% probability of a 25-basis-point Fed cut at the next FOMC meeting; Louis Navellier argues this is warranted by recent soft data including the ADP report showing a loss of 32,000 private payrolls in November, weakening real-estate prices that raise deflation concerns, and a sharp Conference Board consumer confidence decline to 88.7 from 95.5. Navellier still expects only modest dovishness in forward guidance—he warns FOMC language and the dot plot may be “sloppy” as members acknowledge limited data.

Luke Lango highlights a potential market inflection: University of Michigan sentiment ticked higher in December for the first time since June and one-year inflation expectations fell from 4.5% to 4.1%, placing sentiment in a historical “50–60 bottoming zone” that has preceded major rallies. The authors link a likely quarter-point cut and sticky upper-2% inflation to renewed risk appetite and seasonality that historically favors a late-December uplift in equities, citing their Power Portfolio outperformance (31.6% in 2025 vs. Nasdaq 18.5%).

On crypto, Lango views last week’s Bitcoin sell-off as leverage-driven and largely purging overextended positions; the 50-week moving average near ~$100,000 is framed as a decisive technical pivot where reclaiming it would likely attract institutional flows while rejection (as in 2018/2022) would be sharply bearish. He outlines a path to a 2026 structural bull market if macro liquidity and tokenization trends accelerate, but emphasizes elevated volatility and the risk of renewed deleveraging until the technical test is resolved.

Key Decisions for Investors

• Consider modest tactical overweight to risk assets and AI/tech infrastructure exposure ahead of a likely 25bp cut, but size positions conservatively and wait for the FOMC statement and dot-plot nuance before adding materially
• Monitor labor data (ADP/private payrolls), housing price trends, Conference Board and University of Michigan sentiment, and one-year inflation expectations as key triggers to either extend risk exposure or trim quickly if weakness deepens
• For Bitcoin, treat the 50-week moving average near ~$100k as the trigger: add materially only on a decisive reclaim with volume and institutional flow confirmation, otherwise maintain limited, non-levered exposure
• Avoid leverage in crypto and maintain disciplined stops/liquidity buffers given recent forced-liquidation dynamics and the potential for sharp downside if the 50-week is rejected