Market Monitor December 16

Highlights

Predominantly positive results for the US stock markets, with the Nasdaq leading the way. This is mainly due to Broadcom, which gained over 11% after already surging more than 24% the previous day.

Cheaper, custom-made AI chips for specific applications, sold to major new clients like Apple and OpenAI, are driving the strong price movements in recent days. Analysts have raised their price targets for Broadcom to a range between $240 and $250.

Broadcom's success has led those same analysts to anticipate a less dominant position for Nvidia. The tech giant has lost 4% over the past two days.

Investors are also focusing on the upcoming Fed meeting, where a 25 basis point rate cut is expected, with significant attention on the interest rate outlook for 2025.

Major Indices Overview

The performance of key indices (SPY, QQQ, and IWM) for the short and long term:

SPY (S&P 500 ETF)

• Daily Close: $606.79 (+0.43%)
• Short-Term Trend: Positive
• Long-Term Trend: Uptrend

QQQ (Nasdaq 100 ETF)

• Daily Close: $538.17 (+1.4%)
• Short-Term Trend: Positive
• Long-Term Trend: Strong Uptrend

IWM (Russell 2000 ETF)

• Daily Close: $234.44 (+0.59%)
• Short-Term Trend: Slightly Negative
• Long-Term Trend: Positive

Sector Performance

Week Performance:

• Worst Performers: Materials (-4%), Health Care -4%) and Energy (down -3%)
• Best Performer: Information Technology (up over 2%)

1-Month Performance:

• Worst Sector: Energy
• Top Gainers: Information Technology, Consumer Discretionary

3-Month Performance:

• Weakest Sector: Real Estate
• Strongest Performer: Information Technology (gained over 30%)

Historical Breadth Numbers

Breadth data gauges the strength or weakness of moves in a major index, e.g. the percentage of advancing and declining stocks across days and moving averages.

Advancing/declining Stocks

• Advancing Stocks: 46.6%
• Declining Stocks: 50.5%

Adv/Decl 3-Month: 52.1% advancing vs. 47% declining, showing a slightly bullish longer-term trend.

SMA Indicators:

• SMA(20): 37.8% (below 50%, suggesting short-term caution)
• SMA(200): 56.7% (still healthy in the long term)

Summary

• The Nasdaq 100 (QQQ) continues to outperform with a strong uptrend and significant short-term gains.
• The S&P 500 (SPY) also maintains a positive trend with steady gains across all timeframes.
• Small-cap stocks (IWM) are showing short-term weakness but remain positive over the longer term.
• Sector Overview: Information Technology leads gains across all periods, while Energy and Real Estate lag behind.
• Market Breadth shows mixed short-term results but remains solid over longer timeframes.

Overall, the market remains bullish, driven primarily by large-cap tech and Information Technology, while small-cap stocks and energy sectors face more challenges.