World Blog by humble servant.Indexes: Bear Trap Confirmation in 2 of 4 Majors (Russell 2000 and NASDAQ 100)

Indexes: Bear 9 Confirmation in 2 of 4 Majors (Russell 2000 and NASDAQ 100)

The four main U.S. indexes (S&P 500, Dow Jones Industrial Average, Russell 2000, NASDAQ 100) have all faced heightened volatility in November 2025, fueled by tariff rollout fears, softening consumer sentiment (dipping to 3-year lows), and persistent inflation at 2.9% CPI. However, true bear traps—sharp downside moves that lure shorts before a bullish reversal—manifest in exactly two: the Russell 2000 and NASDAQ 100. These exhibited exaggerated breakdowns below key supports (e.g., 50-week MAs), followed by snap-backs on volume, trapping bears. The S&P 500 and Dow, while down ~1% month-to-date, stayed in shallower corrections without the "trap" reversal dynamics, trading more as orderly pullbacks—though today's Dow shine has the S&P teetering on the edge of flipping its YTD trend superiority over the blue-chips.

Index Nov 2025 Performance Peak-to-Trough Drop Key Trap Signal Reversal Evidence

Bear Trap?S&P 500-1% (closed ~6,765)-5.1% from Oct 28 high (6,890)Broke below 50-day MA (first since Apr)+0.91% on Nov 25, but no volume surge No—Orderly correction, not trapDow Jones-1% (closed ~47,112)-4% from recent highs1,100-pt intraday swing (Nov 21)+1.43% on Nov 25 (664-pt surge), but choppy without MA reclaimNo—Value-driven dip, steady grind lowerRussell 2000-8.26% (closed ~2,369)-16% from Nov high; entered bear territory (>20% off 52-wk high of 2,449)Broke 50-week MA on tariff news; "valuation trap" at low P/E (17.5x)+2.80% on Nov 21; small-cap rotation on rate cut bets (71% odds for 4 cuts by YE)Yes—Domestic focus amplified drop, but earnings growth (68.3% Y/Y Q3) sparked reversal NASDAQ 100-3% (closed ~23,025)-9.1% from early Nov (25,858); worst week since Apr bear Trapped in 4H range (24,307–25,284); broke 50-week MA+0.67% on Nov 25; rebound from Nov lows mirrors earlier 2025 "scary breakdown" to ATHYes—AI/tech rout lured shorts; spillover momentum from risk assets fueled snap-back

Russell 2000: Textbook Bear Trap

Small-caps got hammered hardest, tumbling 16% from November highs on Trump's tariff plans—double the S&P's decline—pushing it into official bear market territory (down >20% from 52-week peak). This domestic-heavy index (30% less international revenue exposure than S&P) acted as a canary for economic slowdown fears, with profitability gaps (0.1% ROC vs. S&P's 8%) fueling the "aging index" narrative. Bears piled in, but it was a trap: Q3 earnings exploded 68.3% Y/Y (61.6% ex-energy), and Fed cut pricing jumped to 71% odds for four 25-bp reductions by year-end. The Nov 21 +2.80% surge (to 2,369) reclaimed key supports, with analysts eyeing a bottom near average bear drawdowns of 26%. If it holds, this sets up a once-in-a-generation opportunity—small-caps trade at 1.9x P/B (vs. S&P's 4.8x), undervalued since 1999.

NASDAQ 100: Echoes of Risk Asset Reversals

Tech's darling mirrored broader risk-off paths: a post-October peak plunge (9.1% in November) amid AI bubble worries, breaking the 50-week MA in a "scary" breakdown that echoed its earlier 2025 fakeout reversal to new ATHs. The index got boxed in a tight 4H range (support at 24,307), with a rout in Magnificent Seven stocks (down >6% MTD) amplifying the drop—Nvidia alone shed 5% on Meta's Google chip pivot rumors. Yet, it was a trap: The rebound from November lows climbed back to 25,100–25,150 mid-range on Dec rate cut hopes, with STOCH turning at the 20-line and MACD nearing a bullish crossover. Spillover momentum from risk assets suggests upside potential; if it averts a 13EMA/50EMA bear cross, targets $25,267 by December. History favors bulls here—post-bear Nasdaq rallies average 50%+ gains.

Commentary: Traps Signal Resilience, But Risks Linger

This November's action underscores a bifurcated market: In equities, Russell and NASDAQ traps reveal small/tech rotations as buyable dips, not deaths, fueled by earnings beats and Fed easing (100% odds for June cut). Broader S&P/Dow caution reflects tariff/inflation scars, but no systemic cracks—2025 YTD gains still sit at 15%/11% for those benchmarks.

On the flip side, the S&P is on the verge of flipping the Dow's trend dominance after the industrials' shine today—a couple hundred points from reclaiming its YTD lead. The Dow's +1.43% surge to 47,112 (best daily gainer among majors) was powered by value rotation (healthcare up 5% MTD, outpacing tech's -8% slump) and tariff-resilient cyclicals like Walmart (+6.5% on blowout Q3), narrowing the S&P's year-to-date edge to razor-thin margins (S&P ~15% vs. Dow ~11%, but industrials clawed back 0.4% intraday ground). This "flip" looms if the S&P's milder +0.91% close at 6,765 can't hold above 6,700 support—echoing 2023's mid-year rotation where Dow outran by 2% on similar macro jitters. Politically incorrect take: Trump's "Liberation Day" tariffs crushed small/domestic plays initially, exposing how policy whims trap retail bears while whales feast on the panic. Yet, this volatility is healthy—overvalued AI/tech (Nasdaq P/E ~27x) needed the shakeout, and undervalued small-caps (Russell at 1999 lows) scream opportunity. Forward risks? If CPI sticks above 2.9% or December cuts fizzle, traps could flip to real bears (60–70% cycle top odds per some analysts). But a Fed pivot could ignite 25,000+ Nasdaq by EOY. Position for the reversal: Long small-caps/QQQE ETF for diversification. Patience pays—history shows these traps precede outsized runs.