What to Watch Update for Monday December 8, 2025

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Summary of the "What to Watch" Weekend Video Update prepared for Monday, Dec 8, 2025):
Overall Market Tone:
Cautiously positive / neutral-positive. The S&P 500 is holding up well, internals are mostly supportive, and sentiment has improved from very oversold levels, but conviction is low — very choppy, low-volume action with little intraday follow-through. The week ended +0.31% (S&P 500), but it felt “comatose.”
Key Upcoming Event:
Fed is expected to cut 25 bps this week. The question is whether it will be a classic “buy the rumor, sell the news” event.
Big-Picture Takeaway: S&P 500 is only 0.3% from a closing all-time high.
A confirmed rate cut + continued improvement in breadth/sentiment could push it to new highs.
But leadership is narrow and growth stocks are underperforming value — the one persistent yellow flag.
Positives (the bulk of the evidence):
Up week, still in an uptrend (price above 50-day above 200-day MA).
Sentiment has flipped from extremely fearful (Fear & Greed hit 6 on Nov 20) to improving; individual investor survey now positive for the first time in a while.
VIX declining below 20.
Short-, intermediate-, and long-term trend indicators all positive or turning up.
Breadth improving: A/D line at new highs on volume, McClellan oscillators/summation indexes positive, new highs expanding.
Smart-money flow mostly positive.
Transports breaking out and now outperforming the Dow (potential character change).
Small caps (Russell 2000) hit a new all-time high mid-week.
Semiconductors and high-beta areas showing relative strength.
Risk-on/risk-off ratio rising.
Seasonally favorable period (especially the back half of December).
No major inflation or recession fears priced into bonds.
Negatives / Yellow Flags (not red flags yet):
Extremely choppy price action with no real conviction or volume.
Growth dramatically underperforming value for weeks/months (value near all-time highs, growth still below 50-day MA and lagging badly).
Growth/value ratio remains below key moving averages and has not regained leadership.
Momentum stocks, FANG+, and large-cap growth ETFs lack power.
Mid-caps remain the weakest major index.
10-year yield creeping higher ahead of the Fed cut (worth watching).
Watch List (neither clearly pos nor neg):
10-year Treasury yield (rising modestly pre-cut).
Jobless claims (initial claims plunged — very strong; continuing claims still elevated).
Volume remains below average.
Hindenburg Omen still technically “alive” but will expire around Dec 26 if no new spike occurs.
Bitcoin correlation with Nasdaq picking back up after weakening.
Conclusion:
The S&P 500 remains in an uptrend with improving internals and sentiment, and a rate cut could be the catalyst for new all-time highs (S&P is less than 1% away). However, the lack of conviction and the persistent growth-underperformance-versus-value issue are the main reasons to stay cautious and not get overly aggressive. Overall bias is still positive, but it’s a “show me” market that needs stronger leadership and volume to confirm the next leg higher.

PDF of Slides:
https://drive.google.com/file/d/1P6WIz6oUJDVhD6NoenSG3x0QGjvlnAKR/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!