According to Bespoke Research, the market swoon from Christmas through the end of the year was the worst on record, going back to at least 1952. The first session of 2025 also finished in the red.

On the surface, the slight decline seems innocuous, but considering the strong pop out of the gate and how rapidly those gains vanished during the session, it has clearly gotten everyone’s attention.

You Have My Attention

The slightest speck of red today should push the Fear & Greed Index into “extreme fear,” but I think the better description of this market would be “extreme concern.” It's only been one day, so it's too early to panic (tongue-in-cheek). The real problem is a ton of downside between here and the 200-day moving average.

Investors are spoiled and would rather see the S&P 500 surpass its 50-day moving average.

Still An “AI” Rally

While the debate about concentration risk and how much the primary Artificial Intelligence (AI)-Rally names will hold up continues, there is no arguing the growing need to power the power-hungry world of Al.

The new narrative about AI electricity demand will be an “all of the above” Energy (XLE) story, explaining monster moves in key Utilities (XLU) stocks, and severely oversold solar energy names. There is still an element of hype, meaning it will be a wild ride.

Magnificent Muttley

After a problematic multi-year slump, the Russell 2000 Index (RUT) outperformed them all yesterday. After beating other significant indices, high hopes remind me of the old cartoon Dastardly & Muttley In Their Flying Machines, which Muttley dreamed of being excellent in each episode. (We were lucky to have cartoons that referenced Gunga Din.) It's too soon to know, but ‘every dog has its day.’

Today’s Session

All eyes are on Mag Seven and other mega-cap growth names and whether they will come to the rescue today.  As is often the case, they fetched many upgrades and their price targets were increased this morning.

• Tesla's (TSLA) new target is $404 from $298 at Canaccord
• Meta Platform’s (META) new target is $730 at Wolf
• Apple’s (AAPL) new target $260 at Bernstein
• Amazon’s (AMZN) new target is $270 at Wolf
• Microsoft (MSFT) recieved positive comments from Evercore ISI

Still, this week comes with an asterisk as many are still on vacation. The real action begins next week, when the market will need to display oomph early to follow its historical pattern of solid first-half performance in January.

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