Market Monitor January 5th

Highlights

Strong recovery for U.S. stock markets last Friday after a five-day losing streak for the S&P500 as investors went bargain hunting.

Four S&P500 stocks - Texas Pacific Land (+10%), NRG Energy (+6.2%), Constellation Energy (+4%), and Vistra (+8.5%) - already achieved double-digit gains in 2025.

Nvidia jumped 4.5% and gained 8% this year ahead of CEO Jensen Huang’s CES speech, which could fuel further AI enthusiasm.

Investors also favored 2024 winners like Tesla (+8.2%), rebounding from prior losses, and notable risers like Palantir (+6.3%), Arm (+10%), and MicroStrategy (+13.2%). Apple bucked the trend, closing slightly lower.

Major Index Performance:

SPY (S&P 500 ETF):

• The long-term (LT) trend is bullish (+26.51% over the past 12 months).
• The short-term (ST) trend shows recent weakness (-1.56% in the last week, -2.59% over the last month), indicating a possible short-term pullback or consolidation phase.

QQQ (Nasdaq 100 ETF):

• The LT trend is strongly bullish (+30.71% over the past year).
• The ST trend also reflects minor weakness (-2.08% over the past week), but the medium-term outlook remains positive.

IWM (Russell 2000 ETF):

• The LT trend is still bullish (+16.13% over the past year), but performance lags behind SPY and QQQ.
• Recent ST weakness (-0.55% in the last week, -6.83% over the last month) suggests that small-cap stocks are underperforming relative to large-cap growth stocks.

Sector Performance

1-Week Performance:

• Strength: Energy and Information Technology sectors are leading with positive gains.
• Weakness: Real Estate and Financials are the weakest performers, indicating that defensive and rate-sensitive sectors are struggling.

1-Month Performance:

• Strongest Sector: Information Technology is the standout leader, showing the most significant positive performance over the last month.
• Weakest Sectors: Real Estate and Financials remain the laggards, indicating persistent weakness and underperformance.

3-Month Performance:

• Outperformers: Information Technology shows the largest gains, reflecting sustained leadership in growth stocks.
• Underperformers: Real Estate and Materials are the weakest, signaling a preference for sectors with growth potential over cyclical or defensive areas.

All info available on our Sector Performance page

Historical Breadth Numbers

Advancers vs. Decliners:

• The advance-decline ratio for January 3 shows 74.7% advancers versus 23.4% decliners, suggesting a strong breadth on Friday despite the overall market's ST weakness.

Moving Averages (SMA):

• Stocks above key SMAs (20-day, 50-day, 100-day, 200-day):
• SMA(20+): 34.4% of stocks are above their 20-day MA, indicating short-term weakness in the broader market.
• SMA(50+) and beyond: Gradually improving numbers (33.8% to 46.7%) suggest a healthier medium- to long-term market foundation.

Breakouts and New Highs:

• The percentage of stocks hitting new highs (NH) is only 1.5%, reflecting limited breakout activity.

All info available on our Market Monitor page

Market Outlook

Short-Term:

• The market appears to be in a short-term pullback phase, with most major indices and sectors showing some weakness. However, Energy and Information Technology continue to display strength, signaling potential leadership in these areas.

Medium- to Long-Term:

• The LT trends across SPY, QQQ, and IWM remain bullish, supported by a strong performance in growth sectors like Information Technology.

Key Observation:

• Breadth remains mixed, with only a third of stocks trading above their 20-day MA. This indicates that while the broader market trends are bullish, short-term consolidation or sector rotation is ongoing.
• Focus on strong sectors like Information Technology and Energy for potential long setups. Avoid weaker sectors like Real Estate and Financials until they show signs of recovery.