It was another deceptive session that should be cheered and jeered. The record books will show the market up, but those folks experiencing this will tell their grandchildren about the crazy divide between mega-cap growth stocks and the stragglers.

Mag Seven Rule

Heat Map & Market Breadth

The “Mag Seven” rocked, but the real story continues to be the broadening out of the Artificial Intelligence (Al) story as Broadcom (AVGO) ‘kilt’ it again. The good news is there weren’t any disasters, as most decliners were already under pressure.

New Red Flag

When I first started on the Street, a guy with a research service delivered stock market news through a recorded telephone call.  It was great work, and one of his axioms always stayed with me as I learned how to determine the changing of bear markets into bull markets and bull markets into bear markets.

Trends and shifts in new highs and lows.

I'm not sure how long it has to change, but I think it takes five trading days for a shift to change the narrative officially. Yesterday, there were more new lows than highs on the New York Stock Exchange (NYSE) and the NASDAQ Composite.

Ladies and gentlemen, this is a red flag, but there is an offset – 5.5 billion shares traded higher on the NASDAQ—my goodness.

Market Breadth	NYSE	NASDAQ
Advancers	1,078	2,192
Decliners	1,731	2,177
New Highs	80	197
New Lows	128	226
Up Volume	1.25 billion	5.54 billion
Down Volume	2.04 billion	2.26 billion

Make it 11 straight sessions with more decliners than advancers – this trend has no silver lining.

Economic Data

S&P Global Flash U.S. Purchasing Managers’ Index (PMI) saw a surprising decline in manufacturing and a much more significant service improvement.

Philly Fed

More bad news for manufacturing.

The headline number came in +0.2 against the consensus of 12.0.

The good news is that prices have eased, but the bad news is that employment is not available for the current period.

Today’s Session

It’s a quiet morning with equity futures under some pressure. Retail sales came in better-than-expected (surprise); however, declines in food services and miscellaneous hint at some crimping on discretionary spending.  Stripping motor vehicles and gasoline, the 0.2% increase missed consensus of 0.4%.

We are watching the semiconductors closely. They are acting great, considering the weakness in Nvidia (NVDA). But, Nvidia (NVDA) is over 21% of the weight and it is not going to be easy to keep the momentum going.

A close above $260 is a clear technical buy signal.

Comments

Great news for someone who just signed up for your service yesterday. Rick on 12/17/2024 8:37:22 AM

Outside of the mag-7, there looks to be a lot of falling knives in names with 2025 and beyond potential. I'm nibbling a bit here and there, but keeping some powder dry just in case Santa doesn't show up this year before the January thaw. Terry Dowler on 12/17/2024 10:05:08 AM

I bet you meant to type 5 Billion shares traded higher on the NASDAQ. The importance of 1 letter can be staggering. P. Krueger on 12/17/2024 10:30:00 AM

We fixed the sentence. We apologize for the confusion. Karina Hernandez on 12/17/2024 10:33:00 AM

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