Market Monitor December 06

Highlights

• Wall Street closed mixed, with tech stocks rising on expectations of a rate cut. The Nasdaq hit a record high, driven by gains in Amazon, Meta, and Tesla, while the Dow Jones fell.

• A surprising rise in unemployment increased the likelihood of a rate cut by the Federal Reserve.

• UnitedHealth dropped over 5% after the murder of a top executive, causing significant pressure on the Dow due to the company's high weight in the index.

Major ETFs Overview:

SPY (S&P 500):

• The ETF shows a continued strong uptrend with a 1-month gain of 2.05% and a 12-month increase of 32.08%.
• Short-term and long-term trends remain bullish.

QQQ (Nasdaq 100):

• A standout performer with a 2.52% 1-month gain and an impressive 34.25% 12-month return.
• Technology-heavy stocks are driving this performance.

IWM (Russell 2000):

• Displays mixed performance.
• While the 12-month return is 27.91%, the ETF had a negative week (-1.22%), signaling weakness in small-cap stocks in the short term.

Sector Performance:

1 Week:

• Weak sectors: Energy and Utilities saw losses of up to -4%.
• Strength: Information Technology and Communication Services had the best weekly performance with moderate gains.

1 Month:

• Technology remains the strongest sector, followed by Financials and Industrials.
• Materials and Real Estate struggled, with minimal or negative returns.

3 Months:

• Long-term trends favor Information Technology as the dominant performer, followed by Industrials and Consumer Discretionary.
• Real Estate continues to underperform, highlighting a persistent weakness.

All info available on our Sector Performance page

Breadth Numbers:

Advancing vs. Declining Stocks:

• Positive breadth on December 6: Advancing stocks (55.1%) outpaced decliners (42.2%).
• Steady improvement in key breadth metrics like SMA(50+), SMA(200+), and new highs (NH), indicating broad market strength.

Momentum Indicators:

• The percentage of stocks above their 50-day and 200-day moving averages remains strong, over 60%, suggesting healthy market momentum.
• The ratio of advancing vs. declining stocks over the past week and month shows increasing buyer participation.

All info available on our Market Monitor page

Key Observations:

• Technology Dominance: The tech sector (reflected in QQQ and IT sector performance) continues to lead both in short- and long-term timeframes.
• Small-Cap Weakness: IWM’s lagging performance suggests small caps are under pressure, perhaps reflecting economic uncertainties or risk aversion.
• Sector Divergence: Defensive sectors like Utilities and Real Estate are struggling, while cyclical and growth-oriented sectors like IT and Industrials gain traction.
• Breadth Indicates Strength: Overall market breadth remains robust, supporting the continued upward momentum, especially in major indices like SPY and QQQ.