Market Pulse: December 2, 2025

The Quick Take

Yesterday we asked for a breadth bounce to confirm Monday’s weakness was just noise. What we got was something in between, a half-hearted recovery that leaves more questions than answers. Decliners still outnumbered advancers, but the margin narrowed dramatically and, critically, volume flipped in favor of the bulls. The VIX dipped further into the 16s while 19 stocks printed near 52-week highs against just 2 near lows. It’s not the clean “all clear” signal we hoped for, but it’s far from a warning sign either.

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What the Numbers Say

Today’s Breadth: Better, Not Great

Metric	Value	vs Yesterday	What It Means
Advancers	216	+81	43% of stocks gained, up from 27%
Decliners	286	-80	Sellers still won, but barely
A/D Ratio	0.76	+0.39	Negative but improving
Up Volume Share	51.2%	+13.6pp	Volume flipped bullish

Yesterday’s brutal 0.37 A/D ratio improved to 0.76, a meaningful step toward balance. More importantly, advancing volume reclaimed the majority at 51.2%, suggesting that while more stocks fell, the ones rising attracted heavier conviction. That’s a subtle but important distinction. Track the pattern on our breadth dashboard →

The Trend: Holding Its Ground

Moving average breadth slipped slightly but remains in healthy territory:

• 64.6% of stocks above their 20-day moving average (down from 66.9%, still solid)
• 50.7% above their 50-day moving average (down from 52.2%, right at the midpoint)
• 58.5% above their 200-day moving average (down from 60.2%, long-term support intact)
• 19 stocks near 52-week highs vs. only 2 near a 52-week low

The high-low ratio of 9.5 to 1 speaks volumes. When you have nearly ten times as many stocks flirting with 52-week highs as lows, the market isn’t sick, it’s just catching its breath.

Volatility: Even Calmer

Index	Current IV	Historical Avg	Read
SPY	10.9%	17%	Low, calm waters
QQQ	14.9%	22%	Low, tech complacency rising
IWM	15.9%	24%	Normal, small caps steady
VIX	16.59	~20	Below average, no concern

The VIX slipping from 17.24 to 16.59 tells us institutional traders aren’t worried. SPY implied volatility at 10.9%, now 36% below its historical average, means hedges are getting even cheaper. If you’ve been thinking about protection, the market is practically giving it away. Explore current volatility levels →

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Reading Between the Lines

The Volume-Breadth Divergence

Here’s where today gets interesting. We had more declining stocks than advancing ones (286 vs 216), yet advancing volume edged out declining volume (51.2% vs 48.8%). What gives?

When volume tips bullish while breadth stays negative, it often means larger-cap names are leading while smaller-cap and mid-cap stocks lag. This is consistent with year-end positioning, where managers tend to favor their highest-conviction, most liquid holdings.

It’s not a red flag, but it’s worth watching. Sustainable rallies typically feature broad participation. Narrow leadership can work for a while, but it leaves the market vulnerable if those leaders stumble.

Following Up From Yesterday

Yesterday we flagged four things to watch. Here’s the scorecard:

1. Breadth recovery: Partial credit. A/D ratio improved from 0.37 to 0.76, but still negative.
2. Volume character: ✓ Check. Volume flipped bullish, a positive sign.
3. VIX movement: ✓ Check. Declined from 17.24 to 16.59, confirming calm.
4. Moving average tests: Mixed. MA breadth slipped slightly but remains above key thresholds.

Two out of four isn’t a home run, but it’s enough to suggest yesterday’s weakness was repositioning rather than distribution.

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What This Means for Your Positioning

If You’re Looking to Buy

The improved volume profile is encouraging. Stocks that held their gains today on elevated volume are showing institutional support. Focus on names that participated in today’s bullish volume, they’re the ones with buyers accumulating.

With SPY IV at just 10.9%, options remain historically cheap. Long calls in quality names won’t break the bank.

If You’re Already Long

Two consecutive sessions of negative A/D ratios warrant attention, but not alarm. The key metrics, volume, volatility, and new highs vs. lows, remain supportive.

Continue using moving averages as your guide. Stocks holding above their 20-day MA are weathering December’s early chop well. Those breaking below on volume deserve a closer look, but the 64.6% figure suggests most of the market is intact.

If You’re on the Sidelines

We’re two days into December without a clear directional signal. That’s actually okay, sometimes the market digests gains without giving back much ground. The risk here is being patient to a fault, if you’re waiting for a better entry and the market just grinds higher, you may never get it.

Consider scaling in. Deploy a portion of capital now into names holding key support, keep the rest ready for either a pullback or a breakout.

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The Sector View

The volatility landscape continues to tell an interesting story. Real Estate (XLRE) stands out with implied volatility at 29.6%, nearly 48% above its historical average of 20%. That’s the highest relative reading among sectors, suggesting options traders see event risk or uncertainty in REITs.

Technology (XLK) has normalized somewhat at 24.5% IV, just 7% above its 23% historical average, down from the elevated readings we noted yesterday at 32.6%. The nervousness we flagged appears to be fading.

On the calm end, Consumer Staples (XLP) at 13.1% IV sits 13% below its historical average, the picture of defensive complacency. Financials (XLF) at 15.7% IV, 25% below historical, suggests confidence in the rate environment. See all sector performance →

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What to Watch Tomorrow

1. Breadth parity: Can we get a positive A/D ratio? Even 1.0 would mark a psychological shift.
2. Volume confirmation: Two days of bullish volume would cement the improved character.
3. MA breadth stability: Watch for the 20-day percentage to hold above 60%.
4. New highs momentum: Can we push past 20 stocks near 52-week highs?
5. Real estate volatility: Does XLRE’s elevated IV signal something brewing?

If tomorrow delivers a positive A/D ratio with sustained volume support, we can start talking about the December rally resuming in earnest.

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The Bottom Line

Day 2 of December delivered improvement without conviction. The volume flip to bullish is encouraging, but two consecutive negative breadth readings remind us the market hasn’t fully shaken off its early-month wobble.

The good news: nothing in today’s data suggests deterioration. VIX down, new highs crushing new lows, MA breadth still healthy, volume supporting the bulls. The pieces are in place for a resumption of strength, we just need the breadth confirmation to seal the deal.

Markets don’t always move in straight lines. Sometimes they build a base, testing patience before rewarding it. We’re in that testing phase now. Stay engaged, stay patient, and let the data guide you.

Two steps forward, one step back, but still moving forward.

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