Did The Year-End Rally Start On Friday? 

Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

• DJIA 52-wk: +4.40% | YTD: +8.70% | Wkly: -1.91%
• S&P 500 52-wk: +10.62% | YTD: +12.26% | Wkly: -1.95%
• NASDAQ 52-wk: +17.20% | YTD: +15.34% | Wkly: -2.74%
• iShares Bitcoin Trust ETF 52-wk: +15.08% | YTD: -9.58% | Wkly: -10.30%

The major indexes started the week reacting negatively: on Monday the S&P 500 fell about 0.9%, the Dow Jones Industrial Average dipped around 1.2%, and the Nasdaq Composite declined about 0.8% as investors became concerned about the valuation of tech/AI stocks (notably Nvidia Corporation) and the outlook for interest-rates. AP News

Strong earnings reports (for example from Nvidia) failed to fully offset worries about stretched valuations and rising yields. MarketBeat

With the recent government shutdown ending, investors were looking ahead to delayed economic data releases (jobs, inflation) which added some uncertainty. Horvath Wealth Management+1

Investors showed signs of rotating: some of the high-flying tech/AI momentum stocks pulled back, while sectors associated with value, defensive positions or those less exposed to the AI hype got more attention. MarketBeat Areas of caution

The probability that the Federal Reserve will cut rates in December declined (from ~72 % to ~50 %) as weak data and inflation concerns lingered. Horvath Wealth Management

Consumer sentiment was weak: for example the University of Michigan Consumer Sentiment Index posted near historic lows, flagging possible challenges ahead for consumer-driven sectors. Horvath Wealth Management

Light trading volumes due to the holiday calendar (Thanksgiving approaching) added to the risk of sharper moves in either direction. MarketBeat

AI Bubble Fears Are Overblown - Here's What Happens Next

After a stellar and persistent run in the stock market between the tariff-driven selloff in April and the start of November, stocks and other risk assets are experiencing a correction. Between April and the start of November, the S&P 500 gained an incredible 42% and the Nasdaq 100 nearly 60%. A little pullback after that is normal and healthy, as periods of digestion like this are historically favorable to an enduring bull market.

As of now, there is no reason to believe this is anything more than a garden-variety correction, and certainly not the end of a bull market or bursting of an AI bubble. This action appears to have been driven largely by investors simply rotating out of the more speculative corners of the market. Frankly, some of those areas, particularly around quantum computing, crypto, and the more extreme ends of the AI-infrastructure complex, had become extremely frothy in recent weeks. A shakeout like this, though harsh for those investors, is ultimately a reality check.

But investors should not take their eye off the ball. There is a tidal wave of liquidity coming that will push this market higher over the next year. All three major liquidity engines, namely AI capital expenditures, massive US fiscal spending deficits, and a Federal Reserve that is on the verge of further monetary stimulus, are trending higher at the same time. That combination is unequivocally bullish.

BITCOIN:

Bitcoin dropped about 9%–10% over the week, trading around $94,000 on Nov 17 and falling below $90,000, even down toward the $80,000 range by Nov.21 Economic times

The crypto market overall lost in excess of $1 trillion in value over the past six weeks, driven by Bitcoin’s slide. Financial Times+1

Large outflows from spot BTC ETFs (e.g., a $523 million record single-day withdrawal from IBIT) added downward pressure. Reuters

Key Themes & Drivers

Liquidity and risk-off sentiment: Investors pulled back from crypto as broader markets showed signs of vulnerability. (e.g., ETF outflows, thinning liquidity) The Defiant

Macro & policy headwinds: Concerns about the outlook for interest rates (especially from the Federal Reserve), weaker data, and reduced risk appetite weighed on crypto. Verified Investing+1

Technical damage / support breaks: Bitcoin lost key support levels (e.g., the ~$100,000 psychological floor) and entered what some analysts call a “structural reset” rather than just a shallow correction. CryptoPotato+1

Implications & What to Watch

With Bitcoin now significantly off its October highs (~$125,000+), many say the down-move may mark either a deeper consolidation or the start of a new trend. Investopedia+1

Watch for:

ETF flow reversals or continued large outflows

Macro data (inflation, Fed decisions) that impact risk assets indirectly

How Bitcoin behaves around key technical levels (especially ~$80k-$90k)

Liquidity metrics and on-chain signals (e.g., futures basis, open interest)

Dozens of small companies incorporated in Caribbean tax havens and operating in China, Hong Kong, and Southeast Asia have flooded onto the Nasdaq stock exchange over the past few years.

On July 28, Chinese healthcare company Pheton Holdings closed at a record $30.96 a share, giving it a market capitalization of more than $200 million. With less than half a million dollars in annual sales, no profits, and no significant news, the stock had jumped nearly 700% since its initial public offering in September 2024.

Then it all came tumbling down. Shares plummeted 95% on July 29, then another 33% the next day. They have traded below $1 since August and are now at risk of being delisted.

Pheton’s demise isn’t an isolated incident. Dozens of small companies incorporated in Caribbean tax havens and operating in China, Hong Kong, and Southeast Asia have flooded onto the Nasdaq stock exchange over the past few years. Some appear to have been relentlessly touted by unofficial and pseudonymous investor groups, according to documents and chat logs reviewed by Barron’s.

While exchanges and regulators have taken steps to thwart potential market manipulation attached to such stocks, new companies continue to list. Anyone playing in the already-volatile small-cap arena should be on alert to avoid getting burned.

As of mid-October, 490 companies based in China or Hong Kong have listed on the New York Stock Exchange or Nasdaq since 2001, according to data compiled by Jay Ritter, a finance professor at the University of Florida. Around 29% of those listings have come since 2023, with 2025 already setting a record for volume.

The pace has picked up for penny stocks, in particular. From 2001 to 2022, around 6% of the offerings tracked by Ritter raised less than $10 million. Since 2023, more than three-quarters have been below this threshold. These are tiny companies—hot pot restaurants, event planners, obscure consulting firms. Dozens of IPOs from Indonesia, Singapore, and elsewhere in Southeast Asia have joined them.

Several dozen listers have doubled or even tripled their share prices on their first trading days, says Angelo Bochanis, a researcher at Renaissance Capital. A handful, like Pheton, have surged afterward.

One WhatsApp group claiming to be affiliated with a Seattle-area investment advisor repeatedly touted Pheton in the months leading up to its decline, according to chat logs reviewed by Barron’s. One unattributed presentation shared in the group claimed that Gilead Sciences, the drugmaker, would purchase a 30% stake in Pheton and take two board seats.

“Invest in health, for a life of wealth,” the presentation said.

At the end of 2024, Pheton, which develops a type of radiotherapy used in treating cancer patients, reported only 10 full-time employees and $448,196 in annual revenue. It hasn’t turned a profit since 2022.

The relentless promotion continued until Pheton’s collapse on July 29, which one of the WhatsApp group’s leaders blamed on “significant short selling pressure.” Earlier that day, markets analyst Edwin Dorsey published a report warning Pheton was likely “being manipulated by overseas stock manipulation groups and is at risk of a near-term, severe stock collapse.”

A Pheton spokesperson told Barron’s the company “was not aware of and didn’t authorize any promotional activities on platforms such as WhatsApp or elsewhere.” It became aware of those groups after the selloff, the spokesperson added. The company said it had never had a relationship with Gilead. And Gilead itself told Barron’s it hasn’t disclosed any business relationship with Pheton.

In a separate WhatsApp chat reviewed by Barron’s, advisors spent the second half of September recommending a microcap from Singapore called Smart Digital Technology Group. The stock, which listed on the Nasdaq in May at $4 a share, would rise to between $45 and $55 within a couple of months, they said.

That didn’t happen. Smart Digital shares closed at $13.61 on Sept. 25 before plummeting 86% the following day. These WhatsApp promoters similarly blamed the carnage on “malicious short sellers.”

The SEC suspended trading on Smart Digital shortly thereafter due to “potential manipulation.” The company said in a regulatory filing that it received a request for information from Nasdaq and that it “has not participated in any price manipulation activity and will fully cooperate with both the SEC and Nasdaq.” Smart Digital didn’t respond to Barron’s requests for further comment.

Regulators and exchanges have taken steps to address this phenomenon. The SEC set up a task force in September to crack down on securities law violations related to foreign-based companies. The commission can also suspend trading, which it has done for a handful of Asia-based penny IPOs this year alone.

Nasdaq, meanwhile, submitted a proposal to the SEC on Sept. 4 to expedite its delisting process, set a $25 million minimum offering threshold for companies principally operating in China, and introduce a $15 million public float requirement for all new listings.

The SEC has yet to approve the rules, a process that can take months even when the federal government hasn’t been shut down. Nasdaq declined to comment, and the SEC didn’t respond to Barron’s interview requests.

Meanwhile, overseas penny stocks continue to list on Nasdaq. A company called Platinum Analytics Cayman, for instance, surged out of the gates after listing on Sept. 22. Less than two weeks later, the SEC suspended trading because of suspected promotion on social media designed to inflate the share price. The company said it hadn’t participated in any price manipulation.

To be sure, plenty of IPOs around the world will turn out as decent investments. Most are trustworthy enterprises, even if they are riskier than your average S&P 500 constituent. Investors can watch for a few warning signs, though.

First, these companies often float a small portion of their already small number of outstanding shares. Pheton offered 17%, and some offer 15% or less. Even without manipulation, small floats can cause outsize volatility and leave investors vulnerable to big sales by major stockholders.

Second, watch for corporate structures that make tracking various shareholders and transactions more difficult. Many of the most befuddling stocks reviewed by Barron’s are holding companies incorporated in the Cayman Islands or the British Virgin Islands with investors or subsidiaries that are also Caribbean holding companies.

In its prospectus, the Cayman-based Pheton says it controls a British Virgin Islands-based company, which controls a Hong Kong-based company, which controls a Chinese holding company, which in turn controls an operating business in Beijing developing the cancer treatments. That setup can make sense for a large multinational, but it is unusual for a company with 10 employees.

This information, which might steer investors away from the market’s riskiest assets, is available in the prospectus’s companies file with the SEC. But the allure of a post-IPO surge or the hype on social media can sometimes distract from proper due diligence.

Hundreds of foreign penny stocks without much substance behind them have found a home on U.S. markets in recent years. Plenty more are on the way. Few deserve a place in your portfolio.

Earnings from major tech/AI companies: how much upside remains, and can valuations be justified given rising interest rates.

Upcoming economic data releases: retail sales for September— especially with some data delayed due to the shutdown.

Interest-rate expectations: how the Fed responds to weak consumer sentiment but persistent inflation pressure.

Market breadth: whether the rally narrows to fewer stocks (tech/AI) or broadens across sectors.

Holiday-period risk: thinner trading around Thanksgiving means volatility may spike.

The CNN Fear & Greed Index is currently showing 11 (Extreme Fear) as of the most recent update (Nov 21, 2025). FinHacker.cz+1

Quick recap of what that means:

• Scale: 0 = Extremely fearful, 100 = Extremely greedy. SoFi+1
• A reading of 11 indicates a high level of anxiety / risk aversion among investors.
• Historically, extreme fear readings can signal either a market bottom (a contrarian buying opportunity) or the start of more volatility.

The stock market is down approximately 5.5% from their highs, which is standard and healthy. We could see the start of the year end rally soon.

REMEMBER: Be patient, react and don’t predict.

— Richie

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