Friday mornings always feel a little different in the markets, don’t they? There’s that quiet anticipation before the weekend, mixed with the reality that some of the biggest moves happen right when everyone is rushing to close their positions. Today, December 12, the air feels thick with rotation – money flowing out of the high-flyers and into names that have been ignored for months. I’ve been watching this shift for weeks now, and honestly, it reminds me of those moments when the crowd finally realizes the party in one room is dying while another one is just getting started.
What Smart Money Is Watching Right Now
The Dow is pushing for yet another record while the Nasdaq looks ready to open in the red. It’s classic late-year behavior, but the speed of this rotation has caught a lot of people off guard. I’ve learned over the years that these moments create some of the best opportunities – if you can separate the noise from the signal.
Lululemon: When Good Numbers Aren’t Enough
Let’s start with something that perfectly captures today’s mood. Lululemon actually grew revenue impressively – the kind of growth most retailers would kill for. But execution stumbled this year, and then came the bombshell: their CEO is stepping down at the end of January after more than seven years.
Here’s what fascinates me: Jefferies actually upgraded the stock from sell to hold because of this news. Think about that for a second. An analyst saying “yeah, it’s bad, but maybe not as bad as we thought” is somehow bullish these days. The stock was up double digits in premarket, which tells you everything about how beaten down expectations had become.
In my experience, CEO transitions at premium brands are rarely smooth, but they can create interesting entry points if the underlying business remains strong. The tariff concerns are real, no question, but sometimes the market prices in the worst-case scenario and then some.
Broadcom: The Most Misunderstood Beat of the Year?
Speaking of market misunderstandings, Broadcom dropped 5% this morning despite beating earnings and raising guidance. I had to read the commentary twice to make sure I wasn’t missing something.
The fear seems to be that customers are bringing chip development in-house. But having listened to the call, I heard something very different – a company so confident in its position that it’s comfortable with customers doing more themselves because the really sticky, high-margin business remains with Broadcom.
This feels like one of those moments where the market hears what it wants to hear rather than what’s actually being said. I’ve owned positions through similar scares before, and more often than not, the initial reaction proves overdone.
Costco: When Even Great Isn’t Great Enough
Costco’s story is almost comical at this point. Higher membership fees, better margins, strong sales – everything you want to see. And yet the stock is down because… well, because Wall Street had priced in perfection and got merely excellent.
I’ve been through probably a dozen of these Costco “disappointments” over the years. The pattern is remarkably consistent: the stock dips on anything less than a blowout, digests the news, and then quietly marches higher as the business quality reasserts itself. They lowered their price target slightly but kept the equivalent of a strong buy rating. That tells you what the adults in the room actually think.
- Membership fee income up – sticky recurring revenue
- Gross margins improved – pricing power intact
- Net sales beat expectations – core business healthy
- Stock reaction: down anyway because expectations were sky-high
The Value Rotation Nobody Saw Coming
Perhaps the most interesting development is Citi calling Linde a top pick after what’s been a brutal stretch for the stock. Down 6% in a month while everything else rips higher? That’s exactly the kind of setup that makes value investors salivate.
The industrial gas business isn’t sexy, I’ll grant you that. But it’s steady, it’s essential, and it has pricing power that most companies can only dream about. When analysts start talking about “overdone pullbacks” and “high-quality project backlogs,” my ears perk up. These are the kinds of names that tend to outperform when the growth trade finally runs out of steam.
RH Shows Luxury Isn’t Dead Yet
In a housing market that everyone’s calling the worst in fifty years, RH – yes, the company formerly known as Restoration Hardware – managed year-over-year increases. They led their earnings call talking about opening a store in Paris. The confidence is almost offensive.
Earnings per share missed, revenue matched, guidance was light – the usual mixed bag. But sometimes you have to look past the numbers to the psychology. When a luxury company is making bold moves in Europe during what’s supposed to be a housing apocalypse, maybe the apocalypse isn’t quite here yet.
Bristol Myers: The Turnaround Might Actually Be Real
Guggenheim upgrading Bristol Myers to buy going into 2026 feels significant. This is a name that’s been left for dead multiple times, yet keeps finding ways to surprise to the upside.
The schizophrenia drug Cobenfy is the wildcard here. If it gains traction the way some think it can, the valuation starts looking absurd. Pharma turnarounds are tricky – I’ve been burned before waiting for pipeline drugs to deliver – but the risk/reward is starting to look compelling when analysts who know the space best are pounding the table.
The Fermi Disaster: A Cautionary Tale
Not everything is rosy, of course. Fermi – the power company that came public with so much hype – saw its first major tenant terminate a $150 million deal. The stock plunged nearly 44% to $8.50 after trading as high as $37.
This is why I always caution about recent IPOs, especially in hot sectors. The stories sound incredible, the presentations are slick, but sometimes the revenue just isn’t there yet. When that first big contract falls apart, reality hits hard and fast.
The Mag 7 Isn’t Dead Either
JPMorgan raising their Alphabet target to $385 while keeping a buy rating reminds us that the magnificent seven trade isn’t completely over. They’re picking Alphabet and Amazon as top ideas going into next year, along with some newer names like DoorDash and Spotify.
The rotation into value doesn’t mean growth is dead – it just means selectivity matters more than ever. The best growth names will probably keep working, just with more realistic valuations and less competition for capital.
Ciena: The Quiet Winner of 2025
Sometimes the best stories are the ones nobody was paying attention to. Ciena, the high-speed connectivity provider, has nearly tripled this year and still managed to deliver a clean beat-and-raise quarter with guidance that had analysts scrambling to upgrade.
Barclays more than doubled their price target to $279. When you see moves like that, you know something fundamental has changed. The AI buildout needs connectivity, and companies that provide the pipes are finally getting their due.
Looking at all this together, what strikes me most is how emotional the market remains. Great numbers get sold, okay numbers get bought, and everything in between creates opportunities for those willing to think independently.
The rotation from growth to value feels real this time, but it’s creating distortions that won’t last forever. Some of today’s losers will be next quarter’s winners, and vice versa. That’s the beauty of markets – they’re never as simple as the narrative of the moment suggests.
I’ve learned to trust the companies more than the stock prices in moments like these. The businesses that execute tend to win eventually, even if the path gets bumpy. And right now, there are more bumpy paths creating interesting entry points than I’ve seen in quite a while.
As always, do your own homework. But if you’re looking for where the smart money might be positioning as we head into year-end, these are the conversations happening in trading rooms right now. Some of these moves will look obvious in hindsight – the trick is having the conviction to act when they’re anything but obvious in the moment.
