Market Monitor December 10

Highlights

Ahead of Wednesday's inflation report, Wall Street saw little action as investors held off on major moves. The Dow Jones fell 0.4%, and the Nasdaq lost 0.3%. Analyst Elias Haddad noted that while the Fed may cut rates next week, it will likely signal a pause in easing starting January.

Walgreens surged 17.7% on reports of takeover talks with Sycamore. Alphabet rose 5% after unveiling its quantum chip, Willow, marking a breakthrough in error correction and reinforcing Google’s tech leadership.

Oracle dropped 7% after issuing a cautious forecast, despite strong cloud revenue growth of 51%, as expectations were exceptionally high following stellar prior quarters.

Major ETF Performance Overview (SPY, QQQ, IWM)

SPY (S&P 500 ETF):

• Short-term trend: A minor loss of -0.31% for the day and -0.18% over the week.
• Medium to long-term trend: Strong gains of +11.06% in the last three months and an impressive +28.44% over the past year.
• Observation: SPY remains in a strong upward trend, with higher lows forming on the chart. Key support lines appear intact.

QQQ (Nasdaq ETF):

• Short-term trend: Positive with +0.72% over the week, showing resilience.
• Medium to long-term trend: QQQ outperforms with +28.44% over the year, supported by strength in technology sectors.
• Observation: QQQ maintains a strong uptrend. Its chart reveals stable higher highs and steady price channel movements.

IWM (Russell 2000 ETF):

• Short-term trend: Weak, with losses of -1.39% over the week and -2.35% over two weeks.
• Medium to long-term trend: Recovering, with +20.13% over the past year.
• Observation: IWM faces some resistance, with the chart reflecting choppy movement and weaker relative strength compared to SPY and QQQ.

Sector Performance Analysis

1-Week Performance:

• Underperformers: Energy, Utilities, and Materials. These sectors faced bearish sentiment in the short term.
• Outperformers: Consumer Discretionary, Information Technology, and Communication Services. These sectors saw notable short-term strength.

1-Month Performance:

• Leaders: Information Technology and Communication Services, driven by strong earnings reports and momentum.
• Laggards: Real Estate and Utilities sectors, reflecting sensitivity to interest rate fluctuations.

3-Month Performance:

• Strengths: Broader gains across most sectors, especially in Consumer Discretionary, Technology, and Financials, indicating ongoing recovery in cyclical stocks.
• Weakness: Real Estate remains a laggard, potentially due to headwinds in commercial property markets.

All info available on our Sector Performance page

Historical Breadth Numbers

Advancing/declining Stocks

• Advancing stocks: Only 33.9%, highlighting weak short-term momentum.
• Declining stocks: 62.9%, suggesting broader market consolidation.

SMA Trends:

• Stocks above SMA(20): 55.5%, reflecting limited short-term momentum.
• Stocks above SMA(200): A healthy 62.5%, indicating longer-term strength persists.

Multi-day trends:

December 9 showed similar declining breadth, while SMA trends (e.g., SMA(200+)) remain steady above 60%, signifying resilience in long-term bullish trends.

All info available on our Market Monitor page

Conclusions and Observations

Indices: While SPY and QQQ maintain strong long-term uptrends, IWM struggles in the short term.

Sectors: IT and Communication Services drive gains, while defensive sectors like Utilities and Real Estate lag.

Breadth: Despite weak short-term advancing numbers, long-term breadth indicators (SMA(200+)) confirm underlying bullish market strength