Market Pulse: Friday, December 5, 2025

The Quick Take

December’s first week wraps up with the bulls still in control, albeit quietly. Friday’s advance-decline ratio improved to 1.06 from Thursday’s 1.01, with 258 stocks advancing against 244 declining. Volume remained tilted bullish at 56.6%, marking the fifth consecutive day of positive volume flow. The VIX continued its descent to 15.41, the lowest close since the December rally began. This isn’t a market charging higher, but it’s also not a market showing any cracks. Five days in, the path of least resistance remains up.

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What the Numbers Say

Today’s Breadth: Modestly Positive

Metric	Value	vs Yesterday	What It Means
Advancers	258	+6	51.3% of stocks gained
Decliners	244	-5	Slightly fewer sellers
A/D Ratio	1.06	+0.05	Mild improvement
Up Volume Share	56.6%	+1.2pp	Fifth straight bullish day

The A/D ratio ticked up from Thursday’s coin-flip 1.01 to a modestly positive 1.06. Not dramatic, but directionally correct. The volume ratio at 1.30 means advancing stocks attracted 30% more dollar flow than decliners, a solid improvement from yesterday’s 1.24. After the surge earlier in the week, this is exactly the kind of boring, healthy consolidation you want to see. Track the pattern on our breadth dashboard →

The Trend: Some Cooling

Moving average breadth pulled back slightly but remains constructive:

• 61.8% of stocks above their 20-day moving average (down from 65.2%, still healthy)
• 54.3% above their 50-day moving average (down from 55.5%, holding ground)
• 62.0% above their 200-day moving average (up from 60.4%, long-term trend intact)
• 29 stocks near 52-week highs vs. 8 near a 52-week low

The high-low ratio compressed further to 3.6:1, down from Thursday’s 6.2:1. More stocks drifting toward 52-week lows (8 vs 5 yesterday) suggests some rotation beneath the surface. But 29 stocks near highs still outnumber lows nearly 4-to-1, and no one should panic about single digits on either side.

Volatility: Complacency Deepening

Index	Current IV	Historical Avg	Read
SPY	11.5%	17%	Low, 32% below average
QQQ	16.2%	22%	Normal, 26% below average
IWM	19.2%	24%	Normal, 20% below average
VIX	15.41	~20	Low, approaching extreme complacency

The VIX slid another 0.37 points to 15.41, continuing its week-long descent. We’re now firmly in “complacent” territory. SPY IV at 11.5% is remarkably low, making hedges and defined-risk strategies historically cheap. The DIA (Dow Jones ETF) IV dropped to 11.0%, the lowest among major indices at 31% below its historical average. Explore current volatility levels →

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Reading Between the Lines

The Week That Was

Let’s step back and assess December’s first week:

Day	A/D Ratio	Volume %	VIX	Character
Monday	~0.9	~48%	17.2	Weak open
Tuesday	~1.3	~58%	16.8	Recovery
Wednesday	2.04	64.9%	16.08	Surge
Thursday	1.01	55.4%	15.78	Consolidation
Friday	1.06	56.6%	15.41	Quiet strength

Four of five days posted positive breadth. Volume stayed bullish all week after Monday’s wobble. The VIX dropped nearly 2 full points. This is how rallies sustain themselves: surge, consolidate, build a base, repeat.

Following Up From Yesterday

Yesterday’s watchlist:

1. Breadth stability: ✓ A/D ratio improved to 1.06. Four of five December days positive. Strong statement delivered.
2. Jobs report reaction: ✓ Market absorbed the employment data without drama. VIX didn’t spike.
3. VIX behavior: ✓ Slid to 15.41, approaching 15.5 threshold. Extreme complacency in sight.
4. New highs recovery: ✗ Slipped to 29 from 31. Minor setback but not concerning.
5. Small cap participation: ➖ IWM IV at 19.2%, relatively stable. Small caps neither leading nor lagging.

Four of five watchlist items checked out. The market did exactly what it needed to do heading into the weekend.

The Communication Services Spike

One notable outlier: XLC (Communication Services) IV jumped to 67.0%, a whopping 179% above its 24% historical average. That’s the highest sector IV reading by a wide margin. What’s driving it? Likely positioning around mega-cap tech earnings expectations or individual name volatility (META, GOOGL, NFLX all live in this sector). Worth monitoring but not necessarily bearish, sometimes high IV reflects opportunity, not fear.

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The Sector View

The sector volatility landscape shows some interesting divergences:

Industrials (XLI) spiked to 38.2% IV, 101% above its 19% historical average. This is a sharp reversal from Thursday’s normalized reading. Industrial volatility has been erratic all week, possibly reflecting tariff/trade headline sensitivity or infrastructure spending positioning.

Healthcare (XLV) elevated at 34.0% IV, 89% above its 18% historical average. This could reflect drug pricing headlines, Medicare negotiation news, or positioning around healthcare policy uncertainty.

Tech (XLK) remains calm at 12.5% IV, now 46% below its 23% historical average. Tech continues to be the calm eye of the storm, which typically happens when the sector is in favor.

Financials (XLF) normal at 18.3% IV, just 13% below historical. Banks have been steady participants in the December action.

The calmest corners: Energy (XLE) at 25.0% IV (11% below average) and Real Estate (XLRE) at 16.6% IV (17% below average). See all sector performance →

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What This Means for Your Positioning

If You’re Looking to Buy

The week’s action created a higher base. Breadth stayed positive, volume stayed bullish, volatility stayed low. The risk/reward for adding exposure here is reasonable, though not as compelling as it was Monday.

Use the 20-day moving average as your guide. 61.8% of stocks are above it, which means the trend is your friend. Focus on names holding above that level with sector tailwinds.

If You’re Already Long

Stay the course. Nothing in this week’s data suggests changing positioning. The VIX at 15.41 makes hedging cheap if you want to add downside protection, but there’s no urgency.

The 200-day MA breadth improvement (from 60.4% to 62.0%) is quietly encouraging. Long-term trends are intact and improving.

If You’re on the Sidelines

The market gave you chances this week, Monday’s weakness was the best entry. But the setup isn’t terrible here. We’re consolidating a move higher, not rolling over.

If you’re waiting for a pullback, you might be waiting a while. The VIX sub-16 suggests traders don’t expect one soon. Scale in or use defined-risk strategies to participate with protection.

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The Weekend Perspective

Five days in, December is shaping up as advertised. The first week brought:

• Four positive breadth days out of five
• Five consecutive bullish volume days (since Tuesday)
• VIX compression from 17.2 to 15.41
• No technical breakdowns despite minor rotation
• Sector leadership from tech and financials

The bears had their chance Monday and couldn’t capitalize. The bulls answered with Wednesday’s surge and spent Thursday and Friday consolidating those gains. That’s the rhythm of healthy markets.

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What to Watch Next Week

1. Breadth expansion: Can we push the A/D ratio back toward 1.5+? Consolidation is fine, but continued expansion would confirm the rally’s legs.
2. VIX sub-15: A move below 15 would signal extreme complacency. Watch for any snap-back.
3. MA breadth stability: The 20-day MA breadth at 61.8% needs to hold above 60% to maintain near-term momentum.
4. XLC volatility resolution: 67% IV in communication services needs to resolve, either through price movement or IV compression.
5. New highs expansion: Can we push back toward 35+ stocks near 52-week highs?

The week ends with the bulls in control, but complacency building. That’s usually fine until it isn’t. Enjoy the weekend. Next week tells us whether this rally has more to give.

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The Bottom Line

Day 5 of December delivered exactly what the doctor ordered: quiet continuation. The A/D ratio improved marginally to 1.06, volume stayed bullish for the fifth consecutive day, and the VIX drifted toward 15. No fireworks, no drama, just steady accumulation.

The first week of December is in the books, and the bulls are winning on points. Four positive breadth days, consistent volume support, and steadily declining volatility paint a constructive picture. The setup for the weeks ahead remains favorable.

The only caution: the VIX at 15.41 is getting low. Markets can stay complacent longer than you expect, but eventually that gets tested. For now, the trend is your friend. Ride it, but don’t forget your stops.

Have a great weekend. The market will be here Monday.

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