Proflex Market Update - Wk 45

Shutdown Resolution | Liquidity Pivot | All-Asset Rally Ahead

Last week's market correction, triggered by the longest government shutdown in U.S. history and a subsequent liquidity crunch, is now facing a decisive pivot.
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With a resolution seemingly found for the shutdown and the Federal Reserve actively providing critical liquidity via repo operations, the swift political pivot have dramatically shifted the liquidity landscape.
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We believe the market has fundamentally mispriced the impact of the impending end to Quantitative Tightening (QT) and the Fed's proactive measures, positioning us for a contrarian upside.

Key Drivers This Week

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​Government Shutdown Resolution: A Political U-Turn Sparks Rebound

The 2025 government shutdown, which reached an unprecedented 35 days on November 5, caused a severe liquidity crunch and broad market correction last week.
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The news over the weekend suggests a breakthrough, with some Democrats signaling willingness to pass a continuing resolution (CR) to fund the government.
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The White House had pushed for a CR through November 21, 2025. This political resolution directly contributed to Friday's sharp market reversal, offering significant hope.
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Fed's Liquidity Pivot: SRF & QT Signal a Turning Tide

In parallel to the shutdown chaos, the Federal Reserve has been aggressively bolstering bank liquidity.
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The Standing Repo Facility (SRF), which conducts daily overnight repo operations, has served as a critical backstop.

The New York Fed began repo operations on its new FedTrade Plus platform on November 6, 2025, indicating enhanced operational capabilities.
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Stress on the SOFR rate has notably reduced over the past few days, a clear sign of improving money market conditions. Moreover, the impending end of Quantitative Tightening (QT) on December 1st is a game-changer, expected to inject further liquidity into the financial system.
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All-Asset Rally: Gold and Bitcoin Positioned for Renewed Interest

The improving liquidity outlook and the resolution of the shutdown overhang are poised to re-ignite interest in risk assets.
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​Gold and Bitcoin, which have shown resilience amidst recent volatility, are particularly well-positioned to benefit from this renewed liquidity flow.
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Both assets often thrive in environments of expanding monetary supply and reduced systemic risk.
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Technically, charts had turned bearish last week, but the market's strong reversal on Friday indicates a potential shift.
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With earnings season largely behind us, this week's price action will be crucial in confirming a reversal of the downtrend and establishing a new bullish trend.

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🧭 Proflex Playbook – Seizing the Liquidity Rebound

The market is not merely recovering; it is potentially embarking on a new phase driven by restored liquidity and political stability.
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The window for opportunistic positioning is narrow. Those who recognize the liquidity pivot now will capture the next wave.

Our stance remains clear and decisive:

• Focus on Structural Growth: Continue to overweight the secular AI theme, recognizing its multi-year runway.
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• Anticipate Shallow Corrections: Use dips as accumulation opportunities, not reasons for fear, understanding that "none of the corrections stick."
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• Diversify Thoughtfully: Recognize the "decorrelation" across asset classes; consider gold and Bitcoin for portfolio resilience.
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• Develop Mental Models: Prioritize long-term planning (6-12 months out) over short-term news, aiming for consistent, incremental gains.

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If you're an All-Access or Managed Portfolio subscriber, our positioning has already shifted ahead of this moment—scaling up asymmetric hard asset plays while hedging for earnings volatility and geopolitical tail risks.

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Until next week,
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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.

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