Coiled Spring Capital MR 12/21/25

Table of Contents

• Introduction

• Index Analysis

• Macro Updates

• Internals

• Crypto

• Conclusion

Introduction

In our 10/8 report, The Mike Tyson Market, we likened the stock market to the infamous heavyweight himself—suggesting that a few well-placed body blows weren’t nearly enough to keep him on the canvas.

We wrote at the time:

Fast forward a few months, and December’s resilience feels like déjà vu—or perhaps the bears have simply survived long enough to see Round II of the Mike Tyson title fight. Either way, the script feels familiar. Like a fighter trapped against the ropes, the market absorbed what initially looked like a potential death blow to the AI-led bull narrative earlier this week… and then fired back.

Both the S&P 500 and Nasdaq finished the week in the green, despite a sharp dip in the first half—another reminder that this tape has little interest in staying down.

Markets today react, overreact, and recover with remarkable speed. And more often than not, much of the noise amounts to little more than a glancing blow.

Let’s examine semiconductors to illustrate the point. If you blinked, you might have missed that the group was down roughly 10% in just five days, only to retrace nearly half of that decline by the end of the week. That type of snapback is textbook behavior in retracement-driven markets. Bears will argue this is merely a pause before a push to fresh lows.

Bulls, on the other hand, will argue this is a routine retracement to the golden ratio—the 61.8% Fibonacci level—before the next leg higher. While we are not Elliott Wave practitioners, as wave counts often introduce an uncomfortable degree of subjectivity, we do rely heavily on Fibonacci analysis in our work.

Our focus is on how price reacts at key junctures. Powerful, asymmetric responses matter. When those reactions align across multiple instruments, we view that confluence as increasingly strong evidence supporting the prevailing directional cadence.

If you recall from our 12/17 report, we highlighted the key trendline extending from the April lows in SMH, noting that bears would need to break it decisively to seize control.

We wrote at the time:

Instead, the opposite occurred. Price responded with a powerful weekly hammer reversal at a critical juncture. And as we often remind readers, strong moves at key levels are loaded with information.

What information, specifically? First, bulls stepped in aggressively to defend a major reference point—hardly a bearish development. Beyond that, SMH not only reclaimed the late-October gap window, but also recaptured the 10-week moving average. That combination matters.

We always weigh the totality of the evidence. When signals stack in one direction, probabilities improve. Markets are not about certainties—they are about tilting the odds in your favor.

Remember, how the market closes the week is far more important than what unfolds intra-week—and this past week served as a textbook reminder of that principle. Micron (MU) seemingly saved the day with an exceptionally bullish earnings report on 12/17, noting that they are largely sold out for the next two years.

In our 12/17 report, we wrote:

That observation proved prescient. MU went on to finish the week at an all-time high—hardly the behavior one would expect if a meaningful top were in place. If semiconductors are the cornerstone of the current bull market—and we believe they are—then MU’s strength matters. As a core component of the semiconductor ecosystem, its leadership sends an important signal.

This is not bearish.

Not only did MU help stabilize the semiconductor tape—and likely the broader market—but November’s CPI report delivered another welcome tailwind for bulls who have spent much of the year fretting over sticky inflation.

One notable takeaway from the October–November CPI data is that inflation across most tariff-exposed goods categories appears to be peaking, if not already past its highs. Businesses aggressively cut prices in November amid holiday promotions, while food-price inflation decelerated meaningfully in both months. Taken together, the data point to easing underlying price pressures rather than reacceleration.

Looking ahead, economists at Bloomberg expect inflation to resume its downward trajectory over the coming months, alongside softer labor-market prints. Over time, that combination should erode the resolve of FOMC hawks who remain resistant to easing. Their baseline view calls for 100 basis points of rate cuts in 2026—well above current market pricing of roughly 60 basis points.

That gap between expectations and pricing matters.

Why does this matter? Because easing inflation that leads to additional rate cuts typically extends bull markets—not ends them. History is clear: sustained advances rarely roll over when the Fed is adding more cowbell.

Markets also have a habit of manufacturing mini–panic attacks. They flush out weak hands, shake bullish conviction, and briefly embolden bears—often for no other reason than to build fuel for the next leg higher. Welcome to the jungle.

Just because Mike Tyson is on the ropes doesn’t mean he’s finished. That was the market’s position recently, which is precisely why we titled the last report Bulls Are Against the Ropes, Again. Being pressed against the ropes and being knocked out are two very different things.

So the question now is simple: does the market channel Mike Tyson once more and put the bears down for good this round—or does it find itself in the rare position flat on its back, staring at the lights?

Let’s check the charts and find out.

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