Market at a Glance

Dow 45752.26 | S&P 6538.76 | NASDAQ 22078.05 | Russell 2K 2305.11 | NYSE 20912.89 | Value Line Arith 11418.47

Seasonal: Bullish. December is the third best DJIA, S&P 500, and NASDAQ month of the year. It is Russell 2000’s second best month of the year. Average gains range from 1.4% by S&P 500 to 2.1% from Russell 2000. Post-election-year performance has been mildly softer but average performance remains respectable in a range of 0.8% (S&P 500) to 2.2% (Russell 2000). “Free Lunch” stocks are scheduled to be delivered via email before the market opens on December 22. Our first indicator for the new year, the “Santa Claus Rally” begins on the open on December 24 and spans seven trading days through January 5, 2026.

Fundamental: Mixed. A drought of economic data due to the Federal government shutdown is only further compounding concerns. Today’s release of September’s delayed employment report was better than anticipated with 119,000 jobs being added but it seems dated and irrelevant at this point. October’s employment report has been cancelled, and November’s has been pushed back to December 16. The Atlanta Fed’s GDPNow model’s forecast for Q3 GDP is up to 4.2% and trending higher as of its November 19 update. GDP growth does not seem to align with employment data. Nonetheless corporate earnings were broadly better than expected during the current reporting period.

Technical: Pullback. DJIA, S&P 500, NASDAQ and Russell 2000 have all logged new all-time closing over the past four weeks. DJIA’s last all-time closing high was just last week while other indexes peaked right around the Fed’s October meeting. All have retreated below their respective 50-day moving averages but remain above their 200-day moving averages. DJIA, S&P 500, and NASDAQ are testing support around their October lows. Russell 2000 has already taken out its October lows and is currently trading around its highs from back in January and February. If current support fails, the market could quickly slip further and possibly into a correction (a 10% or greater decline from recent highs).

Monetary: 3.75 – 4.00%. It is all the Fed’s fault. Late to respond to surging inflation, late to recognize inflation’s retreat, and notoriously poor forecasters. There may never have been a promise of a December rate cut but there certainly were plenty of strong signals. In the absence of data, why not err on the side of easy monetary policy? The Fed’s target rate is a range and even with a 0.25% reduction the high end of the new range would still overlap with the bottom of the previous target range.  

Sentiment: Retreating. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 48.1%. Correction advisors are up to 35.2% and Bearish advisors were at 16.7% as of their November 19 release. Over the past two weekly readings, bulls have declined from their peak at 59.3% while the correction camp has swelled from 25.9% to its current level. Overall sentiment is essentially neutral but trending toward levels that have historically signaled reduced risk for new long positions. Historically corrections advisors tend to increase in number as the market corrects and generally peak around the time the correction has run its course. Current levels are not quite there yet but could get there soon.