Market Monitor December 17

Highlights

Stocks fell on Tuesday, with the Dow Jones dropping 0.6%, marking its 9th straight decline—the longest streak since 1978—as investors await the Federal Reserve's interest rate decision. The S&P 500 and Nasdaq also fell slightly but remain close to record highs.

Large-cap tech stocks were mixed: Nvidia fell 1.2%, extending its correction, and Broadcom dropped 3.9%. Meanwhile, Tesla led gainers, rising 3.6%, alongside slight gains for Apple and Microsoft.

Health care stocks slumped after Trump’s remarks on prescription drug markets, with Humana plunging 10.2%. In contrast, Pfizer rose 4.7% after reaffirming its 2024 outlook.

The Federal Reserve is expected to cut interest rates, with investors closely watching Wednesday's meeting for insights on the 2025 economic outlook.

Bitcoin surged to $106,100, having hit a record $108,300 earlier, driven by optimism about pro-crypto policies under a Trump administration.

Major Index Performance

SPY (S&P 500 ETF)

• Close: 604.29 (-0.41%)
• Short-term (ST) Trend: Uptrend, with 1-week gains of 0.25%.
• Long-term (LT) Trend: Positive, with 12-month growth of 27.58%.
• Recent performance: Mixed, with 2-week gains of 0.06% but a stronger 1-month rise of 2.74%.

QQQ (Nasdaq ETF)

• Close: 535.8 (-0.44%)
• Short-term (ST) Trend: Strong upward momentum, 1-week gain of 2.92%.
• Long-term (LT) Trend: Very positive, with a 12-month increase of 31.2%.
• Recent performance: Strong, with 2-week gains of 3.66% and a robust 1-month increase of 7.16%.

IWM (Russell 2000 ETF)

• Close: 231.07 (-1.4%)
• Short-term (ST) Trend: Downtrend, with 1-week losses of 2.28% and 2-week losses of 3.37%.
• Long-term (LT) Trend: Still positive, showing a 12-month gain of 14.69%.
• Recent performance: Lagging, with only 0.93% gains in the past month.

Takeaway:

• The SPY and QQQ remain strong overall, with QQQ leading gains across all timeframes.
• The Russell 2000 (IWM) is underperforming in the short term, facing recent selloffs.

Sector Performance

1 Week:

• Weakest sectors: Materials, Health Care, Energy, and Communication Services were in the red.
• Strongest sectors: Information Technology and Consumer Staples showed notable gains.

1 Month:

• Leading sectors: Information Technology, Consumer Staples, and Industrials.
• Weakest sector: Energy, with notable underperformance.

3 Months:

• Top sectors: Information Technology, Consumer Staples, and Industrials continue to dominate with strong performance.
• Lagging sectors: Real Estate, Materials, and Energy remain the weakest.

Takeaway:

• Information Technology has been the consistent outperformer across all timeframes.
• Defensive sectors like Consumer Staples are also gaining momentum.
• Energy and Materials are the worst-performing sectors.

Historical Breadth Numbers

Advancers vs. Decliners:

• Advancing stocks: 26.9% (weak breadth).
• Declining stocks: 70.5% (broad market weakness).

Moving Averages:

• Stocks above SMA(50): 43.4% (weaker short-term trend).
• Stocks above SMA(200): 54.2% (long-term still positive).

Key Indicator Trends:

• Breadth shows significant short-term weakness but stability in long-term trends.
• Decliners have outpaced advancers in recent sessions, signaling possible short-term market consolidation.

Outlook

The market is experiencing short-term consolidation with significant sector rotation favoring Technology and defensive names. The QQQ remains the leader, while small-cap stocks (IWM) face headwinds.

Investors should monitor breadth recovery and sector trends for potential strength in the coming weeks.