To The Moon

Nasdaq Jumps 4% in Oct.! What’s the Game Plan for Final 2 Months?

October lived up to its legend again — the “bear-killer” month that often resets sentiment.

The Nasdaq Composite climbed ~4.8% in October 2025 as Big Tech rebounded and Treasury yields cooled. Fear turned to FOMO almost overnight.

But now that the easy gains are in, investors face the year-end dilemma:

👉 Do we ride the Santa Rally, or take chips off the table before the music stops?

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1️⃣ October: The Pivot from Panic to Hope

Just weeks ago, sentiment was brittle. Ten-year yields were brushing 5%, inflation looked sticky, and Powell’s “higher-for-longer” message hung over markets.

Then the narrative flipped:

Yields retreated to around 4.0–4.1% by month-end, easing pressure on growth stocks.

Earnings weren’t as bad as feared — several mega-caps held margins better than expected.

AI optimism rekindled, led by $NVDA and $MSFT.

Cash rotated out of money-markets, lifting risk appetite.

By Halloween, the Nasdaq had reclaimed key moving averages, and breadth improved slightly. The panic of September faded into cautious optimism — but complacency can still be costly.

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2️⃣ When Earnings Bite Back

Beneath the headline rally, post-earnings volatility reminded investors how fragile confidence remains.

Meta ($Meta Platforms, Inc.(META)$  ) dropped 7–12% after reporting EPS of $1.05, distorted by a $15.93 billion one-time tax charge. More worrying, management raised 2025 capex to $70–72 billion and flagged higher 2026 spending, while Reality Labs lost $4.43 billion.

Alphabet ($Alphabet(GOOG)$  ) actually beat expectations — Google Cloud grew ~34% YoY, reinforcing the AI-infrastructure theme — but investors stayed selective.

Amazon ($AMZ) rallied on an AWS re-acceleration of ~20% YoY, though margins were mixed by one-offs.

Tesla ($TSLA) stayed volatile as its operating margin slid to ~5.8%, evidence that pricing pressure persists.

These reactions show that in a high-valuation market, even small disappointments get punished. And with the 10-year yield rebounding from its mid-month low, the valuation ceiling still looms large.

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3️⃣ Seasonality vs Reality: Can the “November Effect” Deliver?

Historically, November and December are the two best months for U.S. equities. Between fund rebalancing, holiday optimism, and window-dressing, the “Santa Rally” often adds 3–5%.

Yet 2025 is more nuanced:

Valuations are lofty — the Nasdaq-100 trades near 27–28× forward P/E (low-30s trailing).

Economic strength cuts both ways — it delays rate-cut hopes.

Consumers look stretched, with rising delinquencies and fading savings.

So yes, the rally could extend — but it might be the final sprint before fatigue sets in.

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4️⃣ The Bull View: Liquidity Still Rules

The Fed pause brings predictability — and markets crave stability.

Earnings beats, though modest, sustain confidence.

AI and semiconductors ($SMH) keep attracting structural inflows.

There’s still ~$7.4 trillion parked in U.S. money-market funds — ample dry powder for dips.

If yields stay tame and inflation cools, liquidity could overpower valuation gravity yet again.

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5️⃣ The Bear View: Sentiment Ahead of Reality

Concentration risk is extreme — the “Magnificent Seven” still drive more than half of Nasdaq-100 returns.

Guidance softening hints that Q1 2026 margins may shrink.

Heavy Treasury issuance could siphon liquidity from equities.

Macro shocks — oil, geopolitics, elections — remain wildcards.

Bears warn this is a sentiment-driven melt-up, not a fundamentally secured rally.

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6️⃣ My Playbook: Participate but Protect

My year-end stance: balanced aggression.

Trim euphoric names that defied weak fundamentals.

Rotate into steady compounders — healthcare, infrastructure, dividend tech.

Use options smartly — covered calls on $QQQ or $AAPL; protective puts on $SPY for insurance.

Watch breadth & credit spreads; if $IWM lags, the rally’s health is suspect.

Keep dry powder; corrections create better entries.

It’s not about home runs now — it’s about defending profits while staying agile for one more upside wave if Santa shows up early.

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7️⃣ The Bigger Picture

Bull markets rarely end with bad news — they end with blind faith.

Right now, belief is doing much of the heavy lifting.

If liquidity holds, November could extend the run. But if earnings fade or yields spike again, that 4.8% October gain can vanish in a week.

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