28 Nov 2025 3 min read

Morning Playbook: Riding the AI Regime, Respecting the Floors (2025-11-28 Early Close)

Session: 2025-11-28, US cash equity AM (early close)

Macro Setup: Still an AI-Led, Cut-Friendly, Risk-On Tape

The working assumption remains a familiar one: an ongoing Fed-cut, AI-led, risk-on regime. Policy expectations (as implied by Fed funds futures) still bias toward easier policy over the next few quarters, while Treasury yields are structurally lower than the peaks of the prior hiking cycle and the US dollar has backed off its extremes. None of this says “no risk” – it simply means there is no obvious, acute systemic stress on the tape right now.

The real risk sits in valuations and positioning, especially across AI and mega-cap tech. AI leadership has been persistent, and factor screens continue to reward growth, quality balance sheets, and capex-heavy AI infrastructure. Crowding and lofty multiples are the main things to respect – not an imminent macro shock in this morning’s session.

Evidence / references: For rates and policy expectations, see CME FedWatch. For broader macro and valuation context, see FOMC materials on federalreserve.gov and aggregate index data from providers such as S&P Dow Jones Indices.

How We’re Positioned: Barbell Around the AI Complex

Portfolio equity exposure is intentionally skewed toward the AI/growth complex, with roughly four-fifths of equity risk in vehicles such as $QQQ, $AAPL, $MU, and $NVDA. This is the primary engine: high beta to the AI capex cycle and secular growth trend.

The remaining equity sleeve is distributed across $WMT, $XLV, $XOM, and $CCJ, plus a small allocation to $UVXY as an explicit volatility hedge. Think of this as a barbell:

AI / growth side: high sensitivity to AI spending, cloud, and semiconductor cycles via QQQ and key single names.
Defensive / real-economy / hedge side: staples and health care exposure (WMT, XLV), energy and uranium (XOM, CCJ) for real-asset and commodity-linked ballast, and UVXY as a convex hedge against an air-pocket in risk assets.

Net result: the portfolio is effectively fully invested, with a deliberate tilt toward the prevailing AI-led factor regime, partially offset by defensives and a modest volatility overlay.

Risk Framework: Floors, Not Feelings

Risk is managed via a raise-only floor system on each position. Floors are defined on a close-only basis – intraday volatility does not trigger action on its own. There is no lowering of floors; they either hold or positions get reduced/closed as closes breach them.

Current working floors on the core equity positions:

$AAPL floor: 263 (close-based)
$QQQ floor: 600.75
$NVDA floor: 182
$MU floor: 14
$WMT floor: 103
$CCJ floor: 75.05
$XOM floor: 11.41
$XLV: floor to be formalized; currently monitored via relative strength vs broad market and defensives.

Hedge sleeve: UVXY is sized around roughly 2.5–3.5% of equity, flexed within that band based on realized and implied volatility rather than directionally “calling” the market.

The point of this framework is consistency: exits are rule-based, not mood-based. The portfolio can participate in upside while position size and floors cap the downside on a per-name basis.

Execution for This Morning: No New Trades, Just Discipline

Into today’s early-close session, the book is already where it needs to be: fully deployed and correctly skewed toward the AI/growth regime with a complementary defensive and hedge barbell. With that in mind, the AM plan is intentionally quiet:

No new entries – there is no need to force micro-trades into a low-liquidity, early-close tape.
No active trims – as long as prices remain comfortably above floors and there is no sign of disruptive news, there is no reason to churn.
Monitoring only – focus is on how the main AI complex and defensives trade into the close, particularly where they finish relative to the stated floors.

In short, the goal for this morning is to avoid “activity for activity’s sake” and simply let the existing positioning work.

What We’re Watching Next

The forward playbook branches along a simple axis: continuation vs. reversal of the AI-led regime.

If AI/QQQ strength persists and volatility grinds lower: consider slight trimming of the UVXY hedge (keeping exposure within the 2.5–3.5% equity band) and recycling that risk into either AI infrastructure or other high-conviction growth themes. The goal is to keep the hedge meaningful without allowing it to become a persistent drag as realized vol compresses.
If AI underperforms and key floors begin to break on a close basis: the play is to respect the floors and rotate capital into non-AI strength – health care, defensives, and uranium – rather than doubling down into a deteriorating AI tape. In factor terms: dynamically tilting from high-growth, AI-linked beta toward quality, defensives, and real-asset exposure.

Throughout, the priority stays the same: maintain a portfolio that is aligned with the prevailing macro and factor regime, but governed by clearly defined, raise-only downside levels and a small but active volatility hedge.