December 5, 2025

A less volatile week saw the major averages trade in a range before positive consumer sentiment and inflation data on Friday saw most of the indexes inch closer to fresh all-time highs. Coming off the Thanksgiving week rally, investors were cautious to start out the period while manufacturing data contracting for the ninth straight month. However, the major indexes regained their footing as investors bid up both the Mag 7 stocks and riskier assets, with Apple (AAPL) surging to a new record high on Tuesday. Back-and-forth trading on Wednesday ended with the major indexes settling above trendline resistance levels as the November ADP report showed private payrolls were not as bad as forecasted. Dip buyers stepped in as expectations for a quarter-percent-point Fed rate cut next week gained steam. The final composite PMI for November also showed expansion in the services sector despite rising tariff-related pressures. Mixed signals on Thursday led to a flat session as weekly jobless claims dropped to their lowest level in more than three years, but the unemployment rate held steady at 4.4%.

On Friday, core personal consumption expenditures (PCE) came in right at expectations with a 0.2% monthly uptick. The market briefly rallied, with the S&P 500 touching an intraday record high before pulling back and settling just shy of it. Strength in Technology (XLK), Energy (XLE), Communications Services (XLC), and Consumer Discretionary (XLY) led the market, while Utilities (XLU), Health Care (XLV), and Real Estate (XLRE) were the notable underperformers.

For the period, the DJIA gained 238.57 points (0.5%) and settled at 47954.99. The S&P 500 added 21.31 points (0.3%) and closed at 6870.40. The NASDAQ picked up 212.44 points (0.9%) finishing at 23578.13, while the small cap Russell 2000 tacked on 21.05 points (0.8%) and settled at 2521.48.

Market Outlook: The technical condition of the market remained in good shape this week, as the major indexes lingered within a chip shot of new all-time highs. Most of the indicators remain bullish with MACD, a short-term trend gauge, positive and inching higher, while Momentum, as measured by the 14-day RSI, in bullish territory but moving sideways. The Philadelphia Semiconductor Index (SOX) retraced 100% of the October-November decline and is also flirting with new highs. The sideways movement this week was the result of a lower volatility environment, with the VIX falling below the 16 level for the first time since late September. The DJ Transportation Index continued to trade above its recent trading range which started in July and lasted through November while the small cap Russell 2000 posted a new all-time high on Thursday. However, most of the major averages are approaching overbought levels with Stochastic readings at or above the 80 level. Lastly, the Market Edge/ S&P Oscillator is also in overbought territory with a reading of +5.84.

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.

Currently, the CTI is Positive at +9, unchanged from the previous week. Cycles A, B, C and D are bullish, while Cycle E is bearish. The CTI is projected to remain in a positive configuration into January.

Momentum Index (MI): The market's momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.

The Momentum Index is Positive at +6, unchanged from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 603 units while the number of new 52-week highs exceeded the number of new lows on all five sessions. Breadth was positive at the NASDAQ as the A/D line added 1834 units while the number of new highs out did the new lows on four of the five days. Finally, the percentage of stocks above their 50-day moving average increased to 56.8% vs. 55.7% the previous week, while those above their 200-day moving average rose to 66.9% vs 65.5% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Market breadth was neutral this week with the NYSE and NASDAQ Advance/Decline lines, leading indicators of market direction, moving sideways, despite the NYSE A/D line continuing to flirt with a new all-time high.

Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at –3, down three notches from the previous week.

Investor sentiment is bullish and approaching elevated levels. The latest survey from the American Association of Individual Investors (AAII) survey saw retails bulls jump to 44.3%, their highest number since the second week of October. The National Association of Active Investment Managers (NAAIM) Exposure Index also showed a big uptick from the prior week as the professionals stayed fully invested at 98.6%. The Percentage of Bullish Investment Advisors snapped a three-week consecutive losing streak, coming in at 50.9%.

Market Posture: Based on the status of the Market Edge market timing models, the 'Market Posture' is Bullish as of the week ending 11/28/2025 (DJIA - 47716.42). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

What’s Hot (9) - What’s Not (21): The following are the strongest and weakest Industry Groups for the period ending 12/04/25. Strongest: Healthcare Products, Metals & Mining, Transportation and Technology Hardware. Weakest: Paper & Forest Products, Chemicals, Media and Food, Beverage & Tobacco.

The top performing ETF categories for the week ending 12/04/25 were Sector-Energy (+4.46%), Specialty Technology (+3.86%), Sector-Alternative Energy (+2.75%), Commodity-Energy (+2.60%) and Specialty Natural Resources (+2.54%). The weakest categories were: Bond-Government Long Term Cap (-1.93%), Specialty Utilities (-1.81%) and Specialty Health (-1.76%).

By David L. Blake, CMT