Market Pulse: Tuesday, December 9, 2025

The Quick Take

After Monday’s wake-up call, buyers stepped back in on Tuesday, but selectively. The volume story flipped bullish with 51.7% of flow going to advancing stocks, a meaningful reversal from Monday’s 43.2%. The A/D ratio improved to 0.76, up from Monday’s alarming 0.46, but still shows more stocks falling than rising. The VIX ticked up marginally to 16.94. This feels like stabilization, not a V-shaped recovery. The market is finding its footing after the first pullback of December, but it’s not out of the woods yet.

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What the Numbers Say

Today’s Breadth: Improving, But Not Convincing

Metric	Value	vs Monday	What It Means
Advancers	216	+59	42.9% of stocks gained
Decliners	286	-59	Still 57% falling
A/D Ratio	0.76	+0.30	Better, but under 1.0
Up Volume Share	51.7%	+8.5pp	Volume turned bullish

The story today is volume, not breadth. While more stocks declined than advanced (286 vs 216), the stocks that did rise attracted more dollar flow. The volume ratio at 1.07 means advancing stocks drew 7% more capital than decliners. This is how bottoms often form: smart money accumulates while the advance-decline count still looks weak. Track the pattern on our breadth dashboard →

The Trend: Still Below Key Levels

The data source didn’t include updated MA breadth figures today, but based on the mixed advance-decline picture, we can expect:

• 20-day MA breadth: Likely stabilizing around 55-56% (down from Monday’s 56.1%)
• 50-day MA breadth: Still likely below 50%, the key threshold
• 200-day MA breadth: Probably holding near 58-59%
• 18 stocks near 52-week highs vs. 8 near lows (ratio: 2.25:1)

The high-low ratio holding at 2.25:1 is constructive. We’re not seeing new lows accelerate despite two days of negative A/D readings. That’s quiet strength beneath the surface.

Volatility: Minimal Movement

Index	Current IV	Historical Avg	Read
SPY	17.6%	17%	Normal, flat to average
DIA	14.0%	16%	Low, 12% below average
VIX	16.94	~20	Low-Normal, steady

The VIX barely moved, ticking up to 16.94 from 16.66. No panic, no complacency, just consolidation. SPY IV normalized to 17.6%, right at its historical average. The fear gauge is essentially telling us: “nothing to see here yet.” Explore current volatility levels →

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Reading Between the Lines

Following Up From Monday

Monday’s watchlist:

1. Breadth stabilization above 0.80: ➖ A/D ratio improved to 0.76, just shy of the target. Not a second day below 0.50, so that’s constructive.
2. Volume confirmation: ✓ Buyers stepped in. Volume ratio flipped to 1.07 from 0.76.
3. VIX trajectory above 17: ➖ VIX at 16.94, essentially flat. No hedging panic.
4. 50-day MA breadth above 50%: ⚠️ Likely still below threshold based on mixed breadth.
5. Sector rotation - defensives outperforming: Mixed. We’ll examine below.

The volume flip is the most important signal today. When money flows into advancing stocks even as more stocks decline, it often signals institutional accumulation at lower prices.

What Tuesday’s Action Tells Us

Today’s pattern has a name: selective accumulation. Here’s what’s happening:

1. Big money is buying: The volume ratio turned bullish (1.07) even though more stocks declined
2. Retail may still be selling: The A/D ratio below 1.0 suggests smaller-cap or less-liquid names continued lower
3. Leadership is narrowing: Large-cap quality is being accumulated while broader market remains soft
4. No panic: VIX barely moved, index IV is normal

This is classic “rotation under the surface” behavior. The market isn’t collapsing, it’s re-sorting. Winners are getting accumulated, laggards are being sold.

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The Sector View

Sector implied volatility normalized significantly from Monday’s extremes:

Sector	Current IV	Historical Avg	vs Historical
XLC (Comm Services)	27.0%	24%	+12.4% 🟡
XLK (Technology)	26.1%	23%	+13.5% 🟡
XLB (Materials)	24.1%	22%	+9.3% 🟡
XLY (Consumer Disc)	22.6%	20%	+13.1% 🟡
XLP (Consumer Staples)	18.2%	15%	+21.6% 🟡
XLU (Utilities)	18.1%	17%	+6.4% 🟢
XLV (Healthcare)	17.3%	18%	-3.8% 🟢
XLI (Industrials)	16.1%	19%	-15.5% 🟢
XLF (Financials)	~17%	21%	-19% 🟢

The big story: Monday’s extreme sector volatility has normalized dramatically.

• XLY (Consumer Discretionary) dropped from 55.8% IV Monday to 22.6% today, a massive 33 percentage point contraction
• XLB (Materials) collapsed from 59.2% to 24.1%, normalizing from extreme to elevated
• XLC (Communication Services) fell from 48.2% to 27.0%, still elevated but improving

This volatility compression across cyclical sectors is bullish. When sector IV spikes and then quickly normalizes, it typically means the hedging demand was event-driven (Monday’s selloff) rather than structural (building fear).

See all sector performance →

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What This Means for Your Positioning

If You’re Looking to Buy

Tuesday offered some confirmation that Monday wasn’t the start of a deeper correction. The volume flip is encouraging. But breadth remains negative, so this isn’t an all-clear signal. Consider:

• Scaling in gradually rather than going all-in
• Focusing on quality large-caps that are attracting volume
• Waiting for A/D ratio above 1.0 for confirmation

The ideal entry would come with breadth confirming volume, meaning more stocks rising alongside positive flow.

If You’re Already Long

Tuesday was reassuring but not decisive. The volume support suggests institutional buyers are engaged, but the A/D ratio below 1.0 means the rally isn’t broad yet. Consider:

• Holding existing positions in large-cap quality names
• Tightening stops on extended positions or lower-quality holdings
• Watching for breadth confirmation before adding exposure

If You’re on the Sidelines

The market is giving mixed signals. Volume says “accumulate,” breadth says “be patient.” If you’ve been waiting for clarity, you haven’t gotten it yet. The prudent approach:

• Don’t chase volume alone, wait for breadth to confirm
• Watch the 50-day MA breadth, a recovery above 50% would be constructive
• Note the VIX stability, no panic means time is on your side

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What to Watch Wednesday

1. Breadth confirmation: Can the A/D ratio push above 1.0? That would validate today’s volume signal.
2. Volume persistence: Does the bullish volume ratio hold, or was today a one-day wonder?
3. VIX direction: A move below 16 would signal increasing complacency. Above 17.5 would suggest building concern.
4. New highs expansion: Today’s 18 near 52-week highs is decent. A push toward 25+ would be bullish.
5. Sector IV stability: Continued normalization would be constructive. Any renewed spikes would be concerning.

The market is at an inflection point. Volume flipped bullish, but breadth hasn’t confirmed. Tomorrow will tell us whether buyers have conviction or if today was just a dead cat bounce.

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The Bottom Line

Tuesday delivered the stabilization we hoped for, but not the all-clear. Volume flipped decisively bullish at 51.7% advancing, and the A/D ratio improved from Monday’s concerning 0.46 to a more palatable 0.76. The VIX held steady near 17, showing neither panic nor complacency.

The key insight: volume leads breadth. When institutional money starts flowing into advancing stocks even while more names decline, it’s often an early sign of accumulation. Today’s pattern suggests smart money is buying the dip, even if the broader market hasn’t turned yet.

But confirmation is required. An A/D ratio still below 1.0 means more stocks are falling than rising. Until breadth turns positive, this recovery remains fragile. Wednesday needs to show follow-through: volume holding bullish and breadth pushing toward 1.0 or better.

The sector volatility collapse from Monday’s extremes is encouraging. XLY and XLB normalized dramatically, suggesting the Monday selloff was technical rather than fundamental. The hedging demand was temporary.

December’s rally isn’t dead, but it’s on probation. The bulls made their case with volume today. Now breadth needs to confirm.

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