AM Desk Notes – 2025-11-21: Edging Defensive While AI Bleeds

Session: U.S. cash open through late morning, 2025-11-21. All comments are observational, not advice.

Macro tape: AI air pockets, defensives getting the bid

The morning tape continues the same theme thats been building for days: quiet de-risking out of the AI / mega-cap complex and into anything that looks remotely defensive. Index-level price action is choppy, but the character underneath is clearer:

• Large-cap growth and AI leaders are heavy, with QQQ and the usual mega-cap suspects lagging broader indices.
• Treasuries are bid again, with yields pressing lower intraday as traders hide out in duration rather than chase tech.
• Crude is soft, reinforcing the risk-off tone and weighing on energy beta, even as the higher-quality integrated names hold up a bit better.
• Volatility is elevated vs. the recent lows; VIX and levered vol products are holding bids instead of getting immediately sold, signaling that hedging demand is still there.
• Sector rotation is increasingly textbook: staples, health care, and balance-sheet quality factor baskets are outperforming, while AI / high-multiple names see steady supply.

This is a classic late-stage momentum unwind look: leadership rolling, defensives catching flows, and bonds quietly saying, risk-free sounds nice again.

Sources (macro context and sector/flow color): Bloomberg terminal headlines and sector monitor; FactSet index/sector data; CBOE VIX dashboard; CME Group yield and futures data; public commentary from major sell-side morning notes.

Portfolio structure: barbell with a volatility spine

The book coming into todays open was an AI/growth-heavy barbell tied together by a volatility hedge and a meaningful cash cushion:

• Growth / AI sleeve: AAPL, NVDA, and QQQ as the core expression of the high-multiple, AI-led complex.
• Cyclical / industrial ballast: GE as a quality industrial with its own idiosyncratic story, but still correlated enough to matter for the broader risk cycle.
• Energy: XOM as a large, integrated energy anchor rather than a high-beta exploration play.
• Hedge: UVXY as the explicit volatility spine against this risk stack.
• Cash: Roughly low-teens percentage of the portfolio in idle cash (~12
  3% pre-trade), available for either offense (adding risk into dislocations) or defense (rotating into lower-beta, higher-resilience names).

In other words, the portfolio is still biased toward the AI / mega-cap growth trade, but not all-in: there is ballast (GE, XOM), there is a vol hedge (UVXY), and there is dry powder.

Todays move: adding WMT as a defensive counterweight

This mornings decision was intentionally modest: use a slice of the idle cash to initiate a small long in WMT as a defensive counterweight. No changes were made to existing stops or to the UVXY hedge.

The logic:

• If the AI / mega-cap de-risking accelerates, defensives and staples are one of the cleanest where does the money go instead? destinations.
• WMT offers exposure to staples/consumption resilience with a historically more defensive profile than the current growth-heavy core.
• Position sizing is intentionally conservative, given that the broader risk complex still leans fragile and the barbell is already tilted toward growth.

The net effect: cash drops a bit from the low-teens slice, but the overall portfolio beta should nudge slightly lower as WMT enters the mix alongside UVXY and the existing ballast.

Risk framework: manual floors, end-of-day decisions

The risk system remains unchanged and is built around clear, manually defined floors for each core position. The key rule: exits only trigger after a confirmed daily close below the floor, and execution happens on the following session.

Current floors:

• AAPL: 263
• GE: 297
• NVDA: 182
• QQQ: 600.75
• XOM: 11.41

Intraday violations by themselves dont force a sale; the idea is to avoid getting chopped up by noise and to respect the closing print as the arbiter of trend. The vol hedge in UVXY is there to cushion that overnight gap risk between a close below and the next-day exit.

No floors were adjusted this morning, and the new WMT position will get a formal floor only after its had some time to settle into the book and prove whether it behaves as the intended defensive counterweight.

Into the close: what matters from here

The rest of today is mostly about validation:

• Do QQQ, NVDA, or GE close below their floors? A close under any of those levels would convert todays de-risking from annoying drawdown into a structural signal to exit that name on the next session.
• Does UVXY (and the broader VIX complex) keep its bid? Persistent strength in vol would confirm that hedging demand is real, not just a morning pop that gets sold by systematic vol sellers.
• Do defensives keep outperforming AI and high-multiple growth? If the rotation sticks, the plan is to be ready to recycle capital out of anything that violates its floor and into sectors that are demonstrably working: staples, health care, and quality factor pockets.
• Does crude stabilize or stay weak? Continued weakness would keep a lid on energy beta and argue for sticking with higher-quality rather than chasing the more levered names.

For now, the book remains a barbell: AI and growth on one side, industrial and energy ballast plus UVXY and a new WMT sleeve on the other. The job into the close is to let price action vote on which side deserves less capital tomorrows open.

End of AM notes  2025-11-21. This journal is for process tracking and education only, not a recommendation to buy or sell any security.