Fed cuts. Check. Stocks rally post-2pm. Check. New closing highs in the major indices. Mixed.

The Dow Industrials hit new highs.

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The S&P 500 hit a new closing high but not a new intra-day high.

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The S&P 400 hit a new closing high but not a fresh intra-day high.

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The Russell 2000 scored fresh highs on both counts.

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The NASDAQ 100 failed so far which is an area of concern. The sexy, loved and over-owned AI stocks are being sold and punished. I do not want to see that index close below this week’s low. I do think the index and the AI stocks will offer another buying opportunity sooner than later although early January should see some tax related selling for a few days.

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The lay of the land for the indices is solid. The rally has broadened significantly as evidenced by leadership in the S&P 400 mid caps and Russell 2000 small caps. Look below at the S&P 500 against the equal-weighted S&P. The equal weighted ETF RSP is finally leading which means a broadening of the rally. The zillion dollar question is if this is yet another bounce that leads to more downside or the start of something brand new as I thought about the small caps in April. It is also a funky time of year with tax loss selling ending, window dressing of portfolios and a lack of catalysts for large moves. The market will tell us shortly.

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