Market Pulse: Wednesday, December 10, 2025

The Quick Take

Wednesday delivered the confirmation we were waiting for, and then some. The Fed cut rates by 25 basis points as expected, putting the federal funds rate at 3.5%-3.75%, and markets celebrated with the best breadth of December. The A/D ratio exploded to 3.44, with 389 stocks advancing versus just 113 declining. Volume confirmed the move with 71.8% flowing to advancing stocks. New highs surged to 58, triple yesterday’s count, while new lows collapsed to just 3. The Dow added 500 points. December’s rally isn’t just alive, it’s roaring.

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What the Numbers Say

Today’s Breadth: Explosive

Metric	Value	vs Tuesday	What It Means
Advancers	389	+173	77.5% of stocks gained
Decliners	113	-173	Just 22.5% falling
A/D Ratio	3.44	+2.68	Best of December
Up Volume Share	71.8%	+20.1pp	Strongly bullish

This is what broad-based buying looks like. Tuesday showed us selective institutional accumulation with volume leading breadth. Wednesday showed everyone piling in. The volume ratio hit 2.58, meaning advancing stocks attracted 2.6x more capital than decliners. Every metric points the same direction: up. Track the pattern on our breadth dashboard →

The Trend: MA Breadth Surging

Based on today’s explosive breadth, moving average participation likely improved substantially:

• Near 52-week highs: 58 stocks (up from 18 Tuesday)
• Near 52-week lows: Just 3 stocks (down from 8)
• High/Low ratio: 19.3:1 (massively bullish)

That 19.3:1 high-low ratio is remarkable. For every stock near its annual low, nearly 20 are near their highs. This level of participation breadth typically accompanies the strongest bull phases.

Volatility: Risk-On Mode

Index	Current IV	Historical Avg	Read
SPY	12.8%	16%	Low, -20% vs avg
QQQ	17.7%	22%	Low, -19% vs avg
VIX	15.77	~20	Low, complacent

The VIX dropped to 15.77, down from 16.94 Tuesday, confirming the risk-on shift. SPY implied volatility at 12.8% is 20% below historical norms, reflecting near-term complacency. This is how bull markets feel: low fear, strong breadth, rising prices. Explore current volatility levels →

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The Fed Factor

The FOMC delivered its third rate cut of 2025, reducing the benchmark rate by 25 basis points to 3.5%-3.75%. But this was no ordinary cut:

The divide: Three Fed members dissented, the most since September 2019. Governor Stephen Miran wanted a larger 50bps cut, while Kansas City’s Jeffrey Schmid and Chicago’s Austan Goolsbee preferred holding steady. The committee is genuinely conflicted about where rates should head.

The path forward: The “dot plot” indicates just one more cut in 2026 and another in 2027, a slower trajectory than markets had hoped. Powell described current rates as “the high end of the range of neutral,” suggesting the Fed can afford to wait and watch.

The bonus: The Fed announced it will resume Treasury purchases, starting with $40 billion in T-bills Friday. This liquidity injection adds another supportive factor for risk assets.

The market’s read: Stocks loved it. The Dow surged 500 points following the decision. Sometimes a hawkish cut is better than no cut at all.

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Reading Between the Lines

Following Up From Tuesday

Tuesday’s watchlist delivered across the board:

1. Breadth confirmation above 1.0: ✓ CRUSHED IT. A/D ratio hit 3.44, not just above 1.0 but the best reading of December.
2. Volume persistence: ✓ Volume ratio held bullish at 2.58, up massively from Tuesday’s 1.07.
3. VIX direction: ✓ Moved lower to 15.77, confirming risk-on sentiment.
4. New highs expansion toward 25+: ✓ EXCEEDED. Surged to 58, more than double the target.
5. Sector IV stability: ⚠️ Mixed. Some sectors spiked significantly despite the rally.

Five for five on directional calls. When the market confirms this decisively, it’s telling you something.

What Wednesday’s Action Tells Us

Today’s pattern has a name: breadth thrust. Here’s what happened:

1. Broad participation: 77.5% of stocks advanced, a complete reversal from recent sessions
2. Volume confirmation: 71.8% of volume in advancing stocks, no divergence
3. New highs exploding: 58 stocks near 52-week highs, the kind of expansion that marks healthy rallies
4. VIX compression: Fear dropping even as prices rise, classic bull market behavior
5. Fed catalyst: The rate cut provided fundamental justification for the move

This isn’t short covering or a technical bounce. This is genuine risk appetite returning.

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The Sector View

Sector implied volatility tells an interesting story, with pockets of extreme readings despite the broad rally:

Sector	Current IV	Historical Avg	vs Historical
XLB (Materials)	65.4%	22%	+197% 🔴
XLC (Comm Services)	51.1%	24%	+113% 🔴
XLI (Industrials)	47.3%	19%	+149% 🔴
XLY (Consumer Disc)	42.3%	20%	+112% 🔴
XLK (Technology)	26.1%	23%	+13.5% 🟡
XLV (Healthcare)	21.8%	18%	+20.9% 🟡
XLP (Consumer Staples)	20.2%	15%	+35% 🟡
XLU (Utilities)	18.9%	17%	+11% 🟢

The puzzle: How can breadth explode to 3.44 while Materials (XLB), Communication Services (XLC), and Industrials (XLI) show extreme implied volatility?

The answer: earnings and event risk. These elevated readings likely reflect individual company events, earnings volatility, or options positioning rather than sector-wide fear. When broad breadth is this strong and index VIX is this low, sector-specific IV spikes typically resolve quickly.

See all sector performance →

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What This Means for Your Positioning

If You’re Looking to Buy

Today’s breadth thrust is about as bullish a signal as markets produce. But chasing after a 500-point Dow rally isn’t ideal. Consider:

• Buying pullbacks rather than chasing the ramp
• Focusing on sectors that haven’t fully participated yet
• Using sector IV extremes as potential opportunity: Materials and Industrials showing elevated IV might offer value if the readings normalize

The ideal entry comes on modest profit-taking, not at the day’s highs.

If You’re Already Long

Today validated your positioning. The breadth thrust confirms the December rally has legs. Consider:

• Holding winners through this strength phase
• Reviewing laggards that didn’t participate, time to upgrade?
• Noting the Fed path: just one cut projected for 2026 means rate tailwinds may fade

If You’re on the Sidelines

The market just gave you a clear signal, but it also gave you FOMO fuel. Waiting for a pullback is reasonable, but don’t overthink it. The trend is clearly higher.

• A pullback to retest Tuesday’s levels would be an excellent entry
• Set alerts for A/D ratio dips toward 1.5-2.0 range
• Don’t expect yesterday’s prices, the market has repriced

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What to Watch Thursday

1. Breadth follow-through: Can the A/D ratio stay above 2.0? Consolidation above 1.5 would be healthy.
2. Volume confirmation: Does bullish flow persist, or does profit-taking emerge?
3. VIX floor: How low does volatility go? Sub-15 would signal peak complacency.
4. Sector IV normalization: Do the extreme XLB, XLC, XLI readings start to compress?
5. Treasury market: How do yields respond to the Fed’s Treasury buying announcement?

The market has spoken. Now we watch for confirmation of a sustainable trend versus a one-day wonder.

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The Bottom Line

Wednesday was the day the bulls took control. Breadth exploded to 3.44 as 389 stocks advanced, the best session of December by a wide margin. Volume confirmed with 71.8% flowing to advancing names. New highs surged to 58 while new lows collapsed to just 3. The VIX dropped to 15.77, confirming broad risk-on sentiment.

The Fed delivered the expected 25bps cut, bringing rates to 3.5%-3.75%. While the dot plot suggests a slower cutting pace ahead, with just one reduction projected for 2026, markets focused on the present: another cut in the books and $40 billion in Treasury purchases starting Friday.

The three dissenting votes highlight genuine uncertainty at the Fed. Inflation remains sticky at 2.8%, above the 2% target. But the labor market is cooling, and the Fed believes rates are now in the “high end of neutral.” Powell’s message: we can wait and see from here.

For markets, the signal is clear. Breadth thrust, volume confirmation, volatility compression, and a Fed still cutting rates. Every technical box is checked. The December rally isn’t just surviving, it’s thriving.

The only caution: sector implied volatility remains elevated in Materials, Industrials, and Communication Services despite the broad rally. Watch for these readings to normalize. If they don’t, something beneath the surface may warrant attention.

For now, the trend is unambiguously higher. Breadth says buy, volume says buy, and the Fed just made borrowing cheaper. December’s final push into year-end looks well supported.

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