Market Pulse: Monday, December 8, 2025

The Quick Take

After five days of quiet strength, the market decided to test the bulls on Monday. The advance-decline ratio collapsed to 0.46, with 345 stocks declining against just 157 advancing. That’s the worst breadth reading since early November. Volume flipped decisively bearish at 43.2%, breaking a five-day streak of positive flow. The VIX bounced 1.25 points to 16.66, snapping its week-long descent. This is what happens when complacency gets tested. The question now: is this a healthy pullback or the start of something more?

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What the Numbers Say

Today’s Breadth: Decidedly Negative

Metric	Value	vs Friday	What It Means
Advancers	157	-101	Only 31.2% of stocks gained
Decliners	345	+101	Nearly 69% of stocks fell
A/D Ratio	0.46	-0.60	Sharp reversal
Up Volume Share	43.2%	-13.4pp	Volume now favoring sellers

The A/D ratio plunged from Friday’s 1.06 to 0.46, the first sub-0.50 reading since the November correction. The volume ratio at 0.76 means declining stocks attracted 32% more dollar flow than advancers, a complete flip from Friday’s bullish 1.30. This isn’t a mild rotation. This is sellers taking control. Track the pattern on our breadth dashboard →

The Trend: Cooling Across All Timeframes

Moving average breadth deteriorated meaningfully:

• 56.1% of stocks above their 20-day moving average (down from 61.8%, slipping)
• 49.1% above their 50-day moving average (down from 54.3%, below the 50% threshold)
• 58.7% above their 200-day moving average (down from 62.0%, long-term weakening)
• 13 stocks near 52-week highs vs. 6 near a 52-week low

The 50-day MA breadth falling below 50% is notable. It means fewer than half of S&P 500 stocks are above their intermediate-term trend line. The high-low ratio compressed to 2.2:1, down from Friday’s 3.6:1. We’re not seeing a flood of new lows, but the leadership is clearly narrowing.

Volatility: The Bounce

Index	Current IV	Historical Avg	Read
SPY	12.4%	17%	Low, 27% below average
QQQ	16.8%	22%	Normal, 24% below average
IWM	19.9%	24%	Normal, 17% below average
VIX	16.66	~20	Low-Normal, bouncing off lows

The VIX jumped 1.25 points to 16.66, its first meaningful uptick in over a week. We’re still below the 20 historical average, but the trajectory has reversed. SPY IV crept up slightly to 12.4%, still historically cheap but no longer at extreme lows. The complacency is getting a reality check. Explore current volatility levels →

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Reading Between the Lines

What Changed Over the Weekend?

After five days of quiet accumulation, Monday delivered a wake-up call. Several factors may have contributed:

1. Technical exhaustion: The rally was extended. A/D ratios above 1.0 for four of five days created overbought conditions.
2. Profit-taking: With year-end approaching, some portfolio managers may be locking in gains.
3. Rotation noise: The 50-day MA breadth falling below 50% suggests sector rotation rather than outright panic.
4. VIX mean reversion: A VIX at 15.41 was unsustainably low. A bounce toward 16-17 is normal.

Following Up From Friday

Friday’s watchlist:

1. Breadth expansion: ✗ The opposite happened. A/D ratio collapsed to 0.46.
2. VIX sub-15: ✗ VIX bounced to 16.66, moving away from extreme complacency.
3. MA breadth stability: ✗ 20-day fell to 56.1%, 50-day broke below 50% to 49.1%.
4. XLC volatility resolution: ➖ XLC IV dropped to 48.2% (still elevated at 101% above historical).
5. New highs expansion: ✗ Fell to 13 from 29. Significant contraction.

Zero for five on the watchlist. That’s the market telling us something. The setup changed.

The Sector Volatility Story

Today’s volatility landscape reveals stress points:

Consumer Discretionary (XLY) exploded to 55.8% IV, 179% above its 20% historical average. That’s an extreme reading, likely driven by AMZN and TSLA positioning.

Materials (XLB) spiked to 59.2% IV, 169% above its 22% historical average. The most elevated sector IV on the board. China concerns? Commodity volatility? Worth watching.

Healthcare (XLV) remains elevated at 43.9% IV, 144% above its 18% historical average. Healthcare has been volatile all month.

Tech (XLK) jumped to 27.6% IV, now 20% above its 23% historical average. The first time tech IV has exceeded historical levels in weeks.

Communication Services (XLC) cooled from Friday’s extreme to 48.2% IV, still 101% above historical but improving.

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The Sector View

The sector implied volatility landscape shifted notably:

Sector	Current IV	Historical Avg	vs Historical
XLB (Materials)	59.2%	22%	+169% 🔴
XLY (Consumer Disc)	55.8%	20%	+179% 🔴
XLC (Comm Services)	48.2%	24%	+101% 🔴
XLV (Healthcare)	43.9%	18%	+144% 🔴
XLI (Industrials)	31.0%	19%	+63% 🟡
XLK (Technology)	27.6%	23%	+20% 🟡
XLE (Energy)	22.5%	28%	-20% 🟢
XLRE (Real Estate)	20.0%	20%	0% 🟢
IWM (Russell 2000)	19.9%	24%	-17% 🟢
XLF (Financials)	17.6%	21%	-16% 🟢
XLP (Consumer Staples)	17.6%	15%	+17% 🟢
XLU (Utilities)	22.5%	17%	+32% 🟡

The cyclical sectors (Materials, Consumer Discretionary) are showing the most stress. Defensive sectors (Staples, Real Estate) remain calm. This pattern often precedes continued volatility. See all sector performance →

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What This Means for Your Positioning

If You’re Looking to Buy

Monday’s pullback could be your entry point, but caution is warranted. The A/D ratio at 0.46 suggests broad selling, not selective profit-taking. Wait for:

• A/D ratio to stabilize above 0.80
• 20-day MA breadth to hold above 55%
• VIX to settle below 16.5

If those conditions develop, dip-buyers may find opportunity. Until then, patience pays.

If You’re Already Long

Don’t panic. One down day doesn’t erase a week of gains. But this is a good time to:

• Review stop losses
• Consider hedging if you haven’t already (VIX still relatively cheap)
• Watch your most extended positions

The 50-day MA breadth falling below 50% is a yellow flag, not a red one. But it’s worth respecting.

If You’re on the Sidelines

Your patience is being rewarded. The complacency we flagged Friday is getting tested. If you’ve been waiting for a pullback, this is closer to what you wanted, but don’t assume one day makes a bottom. Let the market prove itself.

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What to Watch Tuesday

1. Breadth stabilization: Can the A/D ratio recover above 0.80? A second day below 0.50 would be concerning.
2. Volume confirmation: Does selling volume persist, or do buyers step in?
3. VIX trajectory: A move above 17 would signal increasing hedging demand.
4. 50-day MA breadth: Needs to reclaim 50%+ to maintain intermediate-term uptrend.
5. Sector rotation: Watch whether defensive sectors start outperforming cyclicals.

Today was the first real test of December’s rally. The bulls have work to do to prove this is just a pause, not a reversal.

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The Bottom Line

Monday delivered the first meaningful pullback of December. The A/D ratio cratered to 0.46, volume turned bearish, and the VIX bounced off its lows. After five days of complacent drift higher, the market finally showed some teeth.

Is this concerning? Yes, in the short term. The breadth deterioration was broad, not selective. But context matters: we’re coming off an extended rally, and pullbacks are normal and healthy. The VIX at 16.66 isn’t panic. The 200-day MA breadth at 58.7% still shows long-term trend intact.

The key now is what happens Tuesday. One down day is noise. Two down days with deteriorating breadth is a pattern. Watch the 50-day MA breadth at 49.1%. If it continues lower, the intermediate-term trend is in question. If it bounces, Monday was just a shake-out.

Stay nimble. The easy money of early December may be behind us.

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