Market Pulse: Friday, December 12, 2025

The Quick Take

Friday delivered what Thursday’s volume fade warned us about: a meaningful pullback. The A/D ratio collapsed from Thursday’s 2.80 to just 0.79, with 280 stocks declining versus 221 advancing. This is the first negative breadth reading since the Fed’s rate cut sparked Wednesday’s rally. Volume confirmed the selling, with declining stocks capturing 57.6% of flow. The VIX bounced back above 15 to 15.74, ending its brief flirtation with peak complacency. But perspective matters: this is what pullbacks look like after explosive rallies. The market gave back some gains, breadth flipped temporarily, and we head into the weekend with a healthier setup than we had at Thursday’s close.

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What the Numbers Say

Today’s Breadth: First Negative Session

Metric	Value	vs Thursday	What It Means
Advancers	221	-146	Just 44% of stocks gained
Decliners	280	+149	56% falling
A/D Ratio	0.79	-2.01	First negative since Fed rally
Up Volume Share	42.4%	-11.3pp	Selling confirmed by volume

Let’s be direct: this is a notable reversal. Going from 2.80 to 0.79 in one session means the market shifted from three-to-one breadth to more decliners than advancers. But context matters. Wednesday’s Fed surge pushed A/D to 3.44, Thursday consolidated to 2.80, and Friday corrected further to 0.79. This is the natural rhythm of markets digesting big moves. Track the pattern on our breadth dashboard →

The Trend: New Highs Retreat Sharply

Metric	Today	Thursday	Change
Near 52w highs	14	51	-37
Near 52w lows	4	4	Unchanged
High/Low ratio	3.5:1	12.75:1	Sharp drop

The new highs reading is the most notable change. Just 14 stocks remain near 52-week highs, down from 51 on Thursday and 58 on Wednesday. That’s a significant retreat. However, new lows held at just 4 stocks, meaning we didn’t see broad capitulation. The 3.5:1 high-low ratio, while down sharply, still favors bulls.

Volatility: VIX Back Above 15

Index	Current IV	Historical Avg	vs Historical	vs Thursday
VIX	15.74	~20	-21%	+0.89
SPY	15.6%	16%	-3%	+0.4pp
QQQ	18.1%	24%	-25%	-0.5pp
DIA	11.3%	16%	-29%	-0.1pp
IWM	18.5%	24%	-23%	N/A

The VIX bouncing back above 15 to 15.74 is actually healthy. Thursday’s sub-15 reading (14.85) represented peak complacency. Today’s modest increase suggests the market is acknowledging some risk rather than being blindly bullish. Volatility levels remain historically low, meaning this is still a calm market by normal standards. Explore current volatility levels →

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Reading Between the Lines

Following Up From Thursday

Thursday’s watchlist results:

1. Volume follow-through: ✗ Volume didn’t return bullishly, it confirmed selling (42.4% advancing).
2. Breadth stability above 2.0: ✗ A/D ratio dropped to 0.79, well below 2.0 threshold.
3. VIX behavior: ✓ VIX bounced back above 15 to 15.74, healthy normalization.
4. Treasury buying program: Fed’s $40B T-bill purchase program began, markets absorbed it.
5. Weekly close: Mixed, with breadth negative but no panic selling.

Two of five boxes checked. The breadth collapse and volume confirmation of selling are the key concerns. But this is what pullbacks look like, and they’re necessary after vertical moves.

What Friday’s Action Tells Us

Today’s pattern represents profit-taking pullback rather than trend reversal. Here’s the evidence:

1. New lows didn’t expand: Still just 4 stocks near annual lows, unchanged
2. VIX stayed moderate: 15.74 is elevated from 14.85 but not panicked
3. Sector rotation, not broad selling: Some sectors held up while others gave back
4. Volume was decisive but not extreme: Selling confirmed but no panic
5. One-day reversal after three-day rally: Normal profit-taking rhythm

The market surged on Wednesday’s Fed news, consolidated Thursday, and corrected Friday. This is textbook post-news-event behavior. The real test comes Monday: does buying interest return, or does the selling continue?

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The Sector View

Sector implied volatility shows continued normalization with some defensive positioning:

Sector	Current IV	Historical Avg	vs Historical	Signal
XLK (Technology)	27.2%	23%	+18%	🟡 Elevated
XLY (Consumer Disc)	24.4%	28%	-13%	🟢 Normal
XLB (Materials)	24.3%	17%	+43%	🟠 High
XLE (Energy)	24.9%	28%	-11%	🟢 Normal
XLI (Industrials)	25.1%	17%	+48%	🟠 High
XLRE (Real Estate)	18.2%	20%	-9%	🟢 Normal
XLP (Consumer Staples)	14.6%	15%	-3%	🟢 Normal
XLF (Financials)	14.5%	21%	-31%	🔵 Very Low

Key observations: Technology (XLK) at 27.2% shows elevated hedging demand, up from normalized levels earlier this week. Materials (XLB) at 24.3% remains elevated after Wednesday’s extreme spike and subsequent collapse. The very low Financials (XLF) reading at 14.5%, some 31% below historical average, suggests continued confidence in the rate-sensitive sector post-Fed.

See all sector performance →

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The Weekly Perspective

Let’s zoom out and see what December’s second week delivered:

Day	A/D Ratio	VIX	Near Highs	Key Event
Monday	1.54	15.8	42	Early week consolidation
Tuesday	1.89	15.5	45	Pre-Fed positioning
Wednesday	3.44	15.1	58	Fed cuts 25bps, rally
Thursday	2.80	14.85	51	Healthy consolidation
Friday	0.79	15.74	14	Profit-taking pullback

The week tells a complete story: anticipation, explosion, consolidation, correction. Despite Friday’s negative breadth, the weekly pattern is healthy. Markets don’t go straight up. Wednesday’s surge needed to be digested, and Friday delivered that digestion.

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What This Means for Your Positioning

If You’re Looking to Buy

Friday’s pullback offers the entry that Thursday’s consolidation teased but didn’t deliver. Consider:

• Breadth flipped negative: This often marks short-term oversold conditions
• VIX at 15.74: Still low, protection remains relatively cheap
• New highs collapsed to 14: Potential for bounce as leaders retest

The pullback you wanted is here. Whether this is THE entry depends on Monday’s action.

If You’re Already Long

Your positions faced their first real test. The question is whether you:

• Hold through: If your thesis remains intact and you have room to withstand volatility
• Trimmed Thursday: Smart move in hindsight, you can reload at better prices
• Watch Monday closely: A bounce confirms the pullback was healthy, continuation lower warrants attention

If You’re on the Sidelines

This is what you were waiting for. The market gave back gains, breadth turned negative, and you have actual pullback to evaluate. But remember:

• A/D below 1.0 often marks short-term bottoms
• One bad day doesn’t negate the trend established Wednesday
• VIX at 15.74 is still historically low

The market is offering a discount from Wednesday’s highs. The question is whether you trust the underlying trend.

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What to Watch Monday

1. Breadth recovery: Does A/D ratio rebound above 1.0? Staying below 1.0 multiple days would be concerning.
2. Volume character: Is any selling exhausted, or does it continue? Watch for buying volume.
3. New highs stabilization: Can stocks near 52-week highs stabilize above 10-15?
4. VIX direction: Does it continue higher toward 17-18, or settle back below 15?
5. Sector leadership: Which sectors attract buying first? That tells us about risk appetite.

The weekend gives time for digestion. Monday’s open will reveal whether Friday was a one-day event or the start of something larger.

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The Bottom Line

Friday ended the week with the market’s first negative breadth reading since the Fed’s rate cut. The A/D ratio dropped to 0.79, down sharply from Thursday’s 2.80, with 280 stocks declining versus 221 advancing. Volume confirmed the selling at 42.4% advancing.

The VIX rebounded to 15.74, exiting Thursday’s peak complacency zone of sub-15. This is actually healthy, as markets pricing in zero risk tend to get surprised. The new highs count collapsed to just 14, down from 51 on Thursday and Wednesday’s peak of 58.

But let’s maintain perspective. Wednesday saw the Fed cut rates and breadth explode to 3.44. Thursday consolidated to 2.80. Friday corrected to 0.79. This is normal market rhythm after a significant catalyst. The fact that new lows stayed at just 4 stocks means we didn’t see broad capitulation, just profit-taking from the week’s gains.

The weekly pattern remains constructive: strong Fed response, healthy consolidation, expected pullback. Nothing in Friday’s action suggests the rally is over. It suggests the rally is digesting. The difference matters.

Heading into the weekend, the market is in better technical shape than it was at Thursday’s close, when VIX below 15 signaled peak complacency. A pullback now means better entry points. A bounce in VIX means options protection is slightly cheaper. A dip in new highs means room for recovery.

December’s rally faced its first real test and responded with profit-taking, not panic. That’s what healthy corrections look like. Monday will tell us whether this was a one-day event or the start of a deeper pullback. Either way, the market earned a breather after Wednesday’s surge, and Friday delivered it.

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