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Equity futures are slow to get going, slightly down on this day after Christmas. It is a full day of trading, but it could be rather slow, volatility is higher as expected in post holiday session. Not much news to carry the markets and only four trading days left in 2025.

Interest Rates are very slightly lower this Friday as bond traders are probably taking the day off. Rates have been pretty steady over the last couple of weeks. We’ll get a bit more data coming out next week into the new year.

Stocks in Europe were up modestly, led higher by Germany, up .2%. The FTSE is slightly lower, down .2%, gold reached a fresh new high, closing in on 5K, while silver also rallied to a new high on supply concerns in Shanghai. Yields are mostly flat across the curve, the dollar slightly up. In Asia, stocks were up in Japan and the Hang Seng market.

No major earnings releases to speak of this week.

The bulls piled on Tuesday after it appeared they might be out of energy. But while the price action was productive, if we look under the hood it is not so perfect. Breadth was horrible, small caps were weak, bonds were down, but the VIX called the shots. Today is a half trading session, expect some very weak action after the market opens as many traders head out early for the holiday. Trading resumes for a full day on Friday.

Breadth was negative again, and that tells us more sellers are out there than many want to believe. Oscillators are back to hovering near the flat line, which means the froth has been wiped away. But price is higher, you say? Correct, there is now a divergence between price and breadth, and we always defer to the price action if this occurs until it breaks down. Simply means you play this market cautiously.

Volume trends remain sluggish, and we’ll have much less turnover to worry about today with a half session of trading. That will look bad on the chart but remember it is all about the trend. Price is looking strong here and could continue to work its way higher into the end of the year.

We continue to see the markets pulling up and away from the short term moving averages, and with it a chance for a massive decline at any moment. We are not being chicken little here, but the fact is markets are in need of another rest after moving up well over 1% over the last couple of sessions. We may not have that rest until next week.
 

The Internals
 

(Click on image to enlarge)

What’s it mean?

Some nice ticks all session with mostly buy programs pushing this internal into the green. Breadth indicators were poor, the VOLD, ADD and ADSPD all finished negative. Put/calls were rising but the VIX got hammered again, finishing under 14% for the first time this year. That’s a dangerous level, insurance is cheap here, if sellers take control. Internals were weak and show markets are in complacency.
 

The Dynamite

Economic Data:

• Friday:n/a

Earnings this week:

• Friday:n/a

Fed Watch:

Nothing but quiet from the Fed this week as they continue to chew on the latest data. With a jobs report in hand along with CPI there is a good sense the Fed will continue easing policy, but perhaps not at the pace many would like. Only three more meetings with Chair Powell before a new advisor steps into that seat, likely a very dovish official.
 

Stocks to Watch

Volume – Don’t expect to see much volume this week during a holiday-shortened week. However, erratic price moves are likely and that could really cause some consternation before the holiday break.

Metals – A very strong year for silver and gold, these metals may be ready to make a huge run before year end. That would make sense, as buyers plow into precious metals as the dollar weakens.

Bitcoin – Well, barring a miracle it does not appear the crypto coin will make alltime highs before year end as some suggested. Getting to 100K would be a good showing, though. Markets are keying off the liquidity in crypto now, so they are guided up/down by bitcoin.

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