SPX – Key December Stats
-2.5% monthly loss
-Down 12/21 trading days
-Negative breadth 16/21 days
-Closed above mid-point 12/21 days
-Avg. daily gain +62bps
-Avg. daily loss -63bps
-TWO 1% gains
-THREE 1% declines
Patterns
We had a little bit of everything from a pattern perspective in December. First, we started the month with THREE live bullish formations (6,100, 6,180 and 6,200). Of those, the 6,100 target was hit on 12/6, which, of course, was the biggest of 2024.
That also marked the 11th successful pattern since the October’23 low. Coincidence or not, that level (officially at 6,099.97) also marked the 2024 high.
But the story didn’t end there… for the first time in a while, a bullish breakout was negated. With the SPX undercutting the 6,025 breakout-zone during the 12/18 FOMC unravelling, the 6,200 target was nullified. Could that mark the start of a bigger and sustained drawdown? Perhaps… if bullish patterns continue to fail from here, which will be a major theme we’ll be on the lookout for in 2025.
For now, the SPX still is 4% above the more important 5,650 breakout zone, thus, the 6,180-target has remained alive. That was triggered way back on 9/19/24. It marked the completion of the summer volatility and the set the stage for a multi-month extension, thus, seeing it continue to hold is very important.
Over the last week, the bearish blueprint (that we shared after the FOMC meeting) matured and now looks very similar to the suggested path… The next step, of course, would be seeing a downside break and pattern target hit.
Without that, nothing will have changed.
Again, while successful bullish patterns have been necessary for the uptrend to continue, failing bearish patterns have been just as significant.
Monthly
The SPX lost ground in December, which was the second monthly loss in the last three. It was all about the FOMC last month, with that huge 2.9% decline on 12/18 literally being responsible for the monthly 2.5% loss. The last time we had two straight monthly declines was three straight from August-October’23.
Weekly
Here’s an updated view of the weekly channel, with the SPX starting the new year in the pattern’s upper half. Nothing material has changed from this angle either.
Seasonality
Needless to say, the SPX noticeably underperformed in December. The index tends to start January well but peak mid-month and finish on its lows…
Three Straight Declines to End the Year
As we know, the SPX concluded 2024 with three straight declines. Ryan Detrick of Carson Group (via SubuTrade) notes that this actually has been bullish in the weeks that followed going back to 1966… a 100%-win rate over the next 1, 2, 3 and 4 weeks…
Three Straight Years of Double-Digit Gains
While the potential to have a third straight 20% annual gain is low, three straight double-digit advances haven’t been rare recently. As noted by Yardeni Research, over the last 30 years, it’s happened three times: 1995-1999 (five straight), 2012-2014 (three straight) and 2019-2021 (three straight).
The Year AFTER A Lot of New All-Time Highs
SubuTrade notes that:
“The S&P hit 57 all-time highs in 2024.
Only a few years topped 50 all-time highs: 2024, 2021, 2017, 2014, 1995, 1964, 1961.
Historically, the S&P tends to struggle in the next year, especially in Q2…”
However, after a mid-year pullback, the SPX has rallied through Q4 on average.
Monthly Breadth
The SPX had its worst monthly breadth of 2024 in December with just 11% stocks up. A whopping 119 fell at least 10% vs. just ten that gained 10%.
The last time at least 100 stocks dropped more than 10% was April’24.
The last time there were MORE than 119 was in September’22 when 235 dropped 10% or more. That also was the last time more than 90% stocks fell month over month…
The SPX advanced the next month on strong breadth in both Oct’22 and May’24. Indeed, the SPX, itself, endured a lot more pain during Sep’22 and April’24 vs. December’24 given the large cap growth relative strength. However, this does suggest that “the field” is due for a mean-reverting move.
The following charts show us why…
Best & Worst 20 ETFs – December
Only 16 of the 170 ETFs we track actually notched gains in December, and only eight were up at least 1% – Vol, Large Cap Growth and Commodities.
Conversely, 71 plummeted 5%, of which 17 fell at least 10%. Commodities, Homebuilders, HC Providers, Bonds, Solar and Foreign ETFs (priced in Dollars) got hit the hardest.
