Market Monitor December 20

Highlights

The US stock markets closed higher after a volatile day caused by triple witching day, during which the expiration of options led to increased fluctuations. The Dow Jones rose 1.2%, and the Nasdaq gained 1%, despite starting the day in negative territory.

November inflation figures came in slightly lower than expected, easing inflation fears. Core inflation remained steady at 2.8%, while an increase had been anticipated. This also led to a slight drop in the US 10-year Treasury yield.

Nvidia performed strongly, rising 3.3%, while Tesla dropped 3.6%. Carnival Cruises gained 6%, driven by strong quarterly results and positive forecasts for 2025, despite higher cruise prices.

Novo Nordisk's stock experienced a significant decline of approximately 18%, following the release of disappointing results from a late-stage clinical trial of its experimental obesity drug, CagriSema.

Major Indices Overview

SPY (S&P 500 ETF):

• Short-Term Trend: Positive.
• Long-Term Trend: Positive.

Performance:

• 1 Week: -2.16%
• 1 Month: +4.03%
• 12 Months: +24.81%

QQQ (NASDAQ-100 ETF):

• Short-Term Trend: Positive.
• Long-Term Trend: Positive.

Performance:

• 1 Week: -2.23%
• 1 Month: +7.51%
• 12 Months: +27%

IWM (Russell 2000 ETF):

• Short-Term Trend: Negative.
• Long-Term Trend: Neutral to slightly positive.

Performance:

• 1 Week: -4.78%
• 1 Month: +0.01%
• 12 Months: +10.14%

Analysis:

• The broader market (SPY and QQQ) remains in a strong long-term uptrend, despite a short-term pullback over the past week.
• Small caps (IWM) are underperforming, with weaker short-term trends.

Sector Performance

1 Week:

• Strongest: Information Technology.
• Weakest: Materials and Energy.

1 Month:

• Strongest: Information Technology.
• Weakest: Energy and Materials.

3 Months:

• Strongest: Information Technology and Industrials.
• Weakest: Real Estate and Materials.

Analysis:

• Information Technology leads across all time frames, suggesting continued strength in growth and tech stocks.
• Energy and Materials are consistently underperforming, showing weakness in commodities-related sectors.

All info available on our Sector Performance page

Historical Breadth Numbers

Advancing vs. Declining Stocks (12/20/2024):

• Advancing Day: 72.9%
• Declining Day: 24.7%
• Strong Short Term Breadth: Indicates a strong recovery after a recent decline earlier in the week.

SMA Metrics (Stocks Above Moving Averages):

• SMA(20): 16.8% (bearish)
• SMA(50): 29.5% (bearish)
• SMA(200): 53.2% (neutral)

Analysis: Short-term breadth remains weak, but long-term breadth shows over half of stocks are still above their 200-day moving averages.

All info available on our Market Monitor page

Summary & Outlook

Strengths:

• Technology and growth stocks remain the dominant leaders.
• Broad indices like SPY and QQQ show resilience in their longer-term trends, despite recent short-term pullbacks.

Weaknesses:

• Small caps (IWM) are lagging significantly.
• Sector rotation suggests weakness in cyclical and commodity-related areas (e.g., Energy, Materials).

Outlook:

• Watch for continued leadership in growth stocks, especially within Information Technology.
• Monitor small-cap stocks for potential recovery, as their underperformance could signal risk aversion or broader market hesitation.
• Breadth metrics suggest caution, as the short-term remains weak while the long-term trend is still intact.
• This sets up an interesting environment for technical traders and swing traders focused on leading sectors like tech while avoiding weaker areas like energy.