Is this the beginning or the end? - Thomas Ng 24 Nov 2025

The story's the same whether it's Nvidia GPUs or Google's TPUs! It is what it is.

On Monday, November 24 at 7.57pm, I emailed Clients my latest market update titled "Is this the beginning or the end?", offering key insights on the S&P 500 (aka SPX) - the world's most important index - and more.

Below is the full transcript for your perusal:

'Dear Clients,

Clients who have been following my memos closely would know that this current pullback in the markets is not unexpected.

While there has been a lot to unpack recently - from the Crypto Complex breakdown, to the widening gap between the AI economy and Main Street economy, to Michael Burry’s (legendary hedge fund trader) depreciation model arguments for hyperscalers - I will get straight to the point by putting on my Technical Analyst hat first. Do bear with me on the drier elements of the subject matter.

Chart A - SPX Daily Chart dated 21 Nov 2025

Completion of a Head & Shoulders Pattern breakdown (below red horizontal line) will only see a ~10% correction from the all-time highs, which IMHO, is as healthy as it can possibly get.

Technical Outlook - Two Scenarios

1. Bearish Scenario

A sustained breakdown below the S&P500 Index (ie SPX) 6550 +/- level would likely trigger a bearish Head & Shoulders pattern breakdown, with a potential move toward the 6200 - 6124 zone.

This 6200 - 6124 zone is meaningful because:

- It acted as a major resistance from Dec 2024 to Feb 2025, and has now turned into support.

- It aligns with the 38.2% Fibonacci retracement, making it a logical important support level to monitor.

2. Bullish Scenario

The 21 Nov (last Friday) candlestick (or price action) was what we professionals call a 'stick-save' - price bounced off 6550 and closed above it on relatively high volume.

If this short-term momentum continues, we may see a counter-trend bounce toward the midpoint of the Bollinger Bands (~6770).

However, if price cannot generate enough strength to break above this midpoint, then further downside pressure is likely.

Mr Market is at a potential turning point - both scenarios remain in play.

My Take

As shared in previous memos, I have been cautious for months and have repeatedly encouraged clients to rebalance portfolios. While the S&P500 has pushed to new all-time highs, US economic and employment trends have clearly been weakening.

In simple terms, one of the main reasons the index has remained elevated is the extreme concentration at the top.

The top 10 US mega-cap tech stocks now account for close to 42% of the S&P500, and their collective weight and performance move the needle for the entire index. At a minimum, this concentration prevents the broader index from sliding sharply, as long as these mega-caps continue to reach new highs.

Companies such as Microsoft, Google, Amazon, Meta, and Nvidia, etc, have been aggressively pursuing multi-billion-dollar investments in AI infrastructure, which has been supporting both the market and the broader economy through capital expenditures (capex).

It is arguable that, without this AI-related capex, the US growth picture would appear significantly weaker. However, it remains uncertain how much of this investment will translate into broader economic benefits such as jobs, wages, or productivity outside the tech sector.

Putting It Together

With these fundamental drivers in mind, my bias leans toward an eventual break of the Head & Shoulders pattern, targeting the second major support zone (6200 - 6124) - unless short-term price action can decisively reclaim the upper Bollinger Bands segment.

You should understand that even a breakdown to the 6124 level would still represent what I term a 'garden-variety' ~10% short-term correction, which is a normal event in equity markets.

However, if price manages to break above the Bollinger Bands midpoint and reclaim the upper Bollinger Band segment, I will revisit the bullish case for the S&P500 Index for 7,000.

This week and next are likely to be critical for gauging the strength of the rebound, and clients are welcome to reach out for further discussion or clarification.

As usual, Live Long & Trade Well.

Thomas Ng, CMT Principal Trading Representative 首席股票经纪 www.thom-ng.com

#plsreaddisclaimer #chartforillustrationonly #spx21nov25 #whatsyourtradingangleChart Source: Tradingview / Brewmarkets IG / X (Twitter)

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