Market Pulse: Thursday, December 4, 2025

The Quick Take

After yesterday’s decisive 2:1 breadth surge, markets dialed back to near-perfect equilibrium on Thursday. The advance-decline ratio landed at 1.01, essentially a dead heat with 252 stocks advancing against 249 declining. But don’t mistake balance for weakness. Volume remained tilted bullish at 55.4%, the VIX slipped further into the mid-15s, and the high-low ratio still favors bulls at 6.2:1. This looks less like exhaustion and more like consolidation, the market catching its breath after Wednesday’s sprint.

---

What the Numbers Say

Today’s Breadth: Balanced

Metric	Value	vs Yesterday	What It Means
Advancers	252	-85	50.1% of stocks gained
Decliners	249	+84	Near parity
A/D Ratio	1.01	-1.03	Perfectly balanced
Up Volume Share	55.4%	-9.5pp	Still bullish, less emphatic

The step-down from yesterday’s 2.04 A/D ratio to today’s 1.01 is notable but not alarming. Markets rarely maintain 2:1 breadth day after day. What matters is that we stayed positive, even if barely. The volume ratio at 1.24 means advancing stocks still attracted 24% more dollar flow than decliners, not the 86% premium we saw yesterday, but comfortably in bull territory. Track the pattern on our breadth dashboard →

The Trend: Holding Steady

Moving average breadth ticked slightly lower but remains healthy:

• 65.2% of stocks above their 20-day moving average (down from 67.6%, still solid)
• 55.5% above their 50-day moving average (up from 53.3%, intermediate trend improving)
• 60.4% above their 200-day moving average (down from 61.0%, long-term intact)
• 31 stocks near 52-week highs vs. 5 near a 52-week low

The high-low ratio compressed from yesterday’s exceptional 35:1 to a still-healthy 6.2:1. Five stocks near 52-week lows is the first time we’ve seen more than two all week, suggesting some rotation is occurring beneath the surface. That’s normal in a consolidation day.

Volatility: The Slide Continues

Index	Current IV	Historical Avg	Read
SPY	11.9%	17%	Low, 30% below average
QQQ	16.5%	22%	Normal, tech stable
IWM	19.5%	24%	Normal, small caps settled
VIX	15.78	~20	Below average, complacency deepening

The VIX broke through 16 for the first time this week, settling at 15.78. That’s the lowest reading since the rally began and suggests institutional hedging demand has evaporated. SPY IV at 11.9% continues to make protection historically cheap. Explore current volatility levels →

---

Reading Between the Lines

The Consolidation Character

Today’s session has all the hallmarks of healthy consolidation:

1. Breadth compression without reversal: A/D ratio went from 2.04 to 1.01, not negative
2. Volume still bullish: 55.4% advancing volume isn’t decisive, but it’s not distribution
3. VIX falling during pause: When volatility drops on a flat day, it’s bullish
4. MA breadth stable: All three timeframes stayed above 50%, no breakdown

This is textbook behavior for a market digesting gains. The bulls took profits, the bears probed for weakness, and neither side won decisively. That’s actually constructive after a surge like Wednesday’s.

Following Up From Yesterday

Yesterday’s watchlist:

1. Follow-through: ✓ Partial. A/D ratio stayed positive at 1.01, though barely. Not the 1.2-1.5 we hoped for, but not negative either.
2. Volume sustainability: ✓ Third consecutive bullish volume day. Pattern confirmed.
3. New highs expansion: ✗ Pulled back to 31 from 35. Minor setback.
4. Tech volatility: ✓ XLK IV collapsed from 30.6% to 22.5%, essentially normalized to its historical average. Nervousness resolved bullishly.
5. VIX drift: ✓ Slid to 15.78, first close below 16 this week. Complacency confirmed.

Three of five items improved, one held steady, one minor retreat. The overall picture remains constructive.

The Small Cap Story

IWM (Russell 2000) IV settled at 19.5%, just 19% below its historical average, the smallest discount among the major indices. Small caps have been volatile participants in the December action, and options traders are pricing in continued uncertainty. Watch this space. Small caps often lead or lag major turning points.

---

What This Means for Your Positioning

If You’re Looking to Buy

Today’s pause could be your opportunity. With breadth flat but volume still bullish, this is the kind of session where patient buyers accumulate. The VIX at 15.78 makes protection cheap, meaning defined-risk bullish strategies (calls, call spreads, or cash-secured puts) remain cost-effective.

Look for individual names that pulled back today but held above their 20-day moving average. Those are the stocks with buyers underneath.

If You’re Already Long

No reason to change course. A consolidation day after a strong move is normal and healthy. The 65.2% of stocks above their 20-day MA means most positions should be in good shape.

Watch the 20-day moving average as your guide. Stocks holding above it have support. Stocks breaking below on volume may be telling you something. Today’s session didn’t break any technical structures worth worrying about.

If You’re on the Sidelines

Today offered what yesterday didn’t: a pause. If you’ve been waiting for an entry point, this is closer to what you wanted. The market didn’t surge higher, but it also didn’t roll over.

The risk/reward here is reasonable. With the VIX sub-16 and breadth still positive on the week, the path of least resistance remains higher. Scale in, use defined risk, and let the market prove itself.

---

The Sector View

The sector volatility landscape has normalized considerably:

Tech (XLK) saw its IV drop dramatically to 22.5%, essentially flat with its 23% historical average. Yesterday’s 30.6% spike looks like a one-day event, possibly options expiration-related. The normalization is bullish.

Utilities (XLU) stands out at 25.8% IV, a whopping 52% above its historical 17% average. This is unusual for a defensive sector and bears watching. Is it rate sensitivity? Positioning around nuclear/AI power plays? Worth monitoring.

Consumer Discretionary (XLY) cooled to 25.5% IV, down from 40.1%. Still 27% above historical but moving in the right direction.

Industrials (XLI) normalized dramatically to 15.8% IV, now 17% below historical. Yesterday’s 45.5% reading was clearly an aberration.

The calmest sectors: Financials (XLF) at 14.9% IV (29% below average) and Energy (XLE) at 18.7% IV (33% below average). Traditional value sectors remain confident. See all sector performance →

---

What to Watch Friday

1. Breadth stability: Can we string together another positive A/D ratio? Four of five December days positive would be a strong statement.
2. Jobs report reaction: Friday brings the employment situation, a potential volatility catalyst.
3. VIX behavior: A sustained move below 15.5 would signal extreme complacency.
4. New highs recovery: Can we push back toward 35+ stocks near 52-week highs?
5. Small cap participation: Does IWM lead or lag into the weekend?

Today was the rest day. Tomorrow tells us whether the bulls reload or the bears find their footing.

---

The Bottom Line

Day 4 of December delivered exactly what markets needed after Wednesday’s surge: a pause that refreshed without reversing. The 1.01 A/D ratio is as close to balanced as you can get, but the supporting cast, bullish volume, falling VIX, healthy MA breadth, continues to favor buyers.

Consolidation is a feature, not a bug. Markets can’t rally every day, and when they pause without giving back ground, it’s typically a sign of underlying strength. The sellers probed, found limited supply, and the VIX dropped anyway. That’s not weakness, that’s a bull market catching its breath.

The December narrative remains intact. We started weak, recovered strongly, and now we’re consolidating the gains. That’s the playbook for sustainable advances.

Stay patient. Stay positioned. Let the market tell you what comes next.

---