What to Watch Update for Monday December 15, 2025

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Summary of “What to Watch” Video Update prepared for Monday, December 15, 2025:
This weekly market analysis reviews recent S&P 500 action (all-time high on Thursday, down over 1% on Friday, resulting in a down week) and categorizes indicators into positive, negative, and watch areas.
The core theme is uncertainty about a potential market shift: leadership may be rotating away from mega-cap growth/tech stocks toward broader participation (small caps, value, transports, cyclicals), which could slow index-level gains but indicate a healthier, less concentrated market.
Overall Market Context:
Fed cut rates 25 bps (as expected), dovish tone but more hawkish outlook for 2026 (only one cut projected vs. market expecting two).
Heavy economic data week ahead (including Tuesday employment report); December historically positive, but 2024 had a down December.
Question: Will the “Santa Claus rally” materialize in the second half of December? Seasonally favorable, but conviction is low and volume thinning into holidays.
No spike in fear (VIX below 20); market overvalued for years — not new.
Possible defensive rotation underway, but mega-caps have periodically reasserted leadership.
Positive Indicators:
Low fear (VIX below 20 and moving averages).
Risk-on/risk-off ratio and advance-decline lines mostly rising (all-time highs Thursday on price/volume).
New highs greater than new lows; smart money indicators mostly above moving averages longer-term.
Trend, momentum (PMO, MACD, PPO, TRIX, etc.), parabolic SAR, and McClellan oscillators largely positive across timeframes.
S&P remains above all key moving averages (20, 50, 100, 200); broader indexes (Dow, small caps/Russell 2000, Wilshire 5000) at or near all-time highs.
Transports showing recent strength (breaking resistance, improving ratios vs. Dow/S&P) — potential confirmation of broader participation.
Stocks outperforming bonds ratio and seasonality supportive.
Negative Indicators:
Friday’s sharp sell-off turned the week negative; growth underperforming value (growth/value ratio declining, potential death cross).
Large-cap growth, NASDAQ/NDX, semiconductors, and FANG stocks weakened (some below 50-day MAs, momentum rolling over).
Bullish percent indexes declining for S&P and NASDAQ 100; small/mid-cap growth pulling back sharply.
Divergences in volume vs. price (e.g., Swenlin Trading Oscillator); high-beta lagging low-beta recently.
Hindenburg Omen signal active (initial + confirmation spikes; watch until around Dec 26).
Watch / Neutral Areas:
Short-term indicators mixed (some below MAs, but support levels holding so far — e.g., 20-period EMA/SMA).
Potential rotation: small caps, mid-caps, transports, and value showing relative strength, but sustainability unclear.
Sector ratios mixed (discretionary holding up, utilities weakening, financials/regional banks improving but long-term underperformance).
Jobless/continuing claims stable-sideways; 10-year yield ticking up (watch if approaches 4.5%).
Skew index elevated (anticipating big move); credit spreads calm.
Longer-term divergences (e.g., Value Line Geometric not confirming highs, NASDAQ not confirming S&P high).
Conclusion:
The S&P 500 remains in an uptrend with mostly positive breadth and momentum longer-term, but short-term weakness, growth underperformance, and signs of rotation raise caution. No clear breakdown yet — support levels are holding — but conviction is low. Monitor whether this is a temporary December pause (allowing a Santa rally) or the start of a more meaningful characteristic change in market leadership. Overall tone: cautiously optimistic, but vigilant.

PDF of Slides:
https://drive.google.com/file/d/14MXIDOMvHOgkPbsYABVTtf0dUEtz0DHQ/view?usp=sharing

DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!