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Key Takeaways

  • Equity index trends remain largely in consolidation mode and important to hold SPX 4612, QQQ-387.60 to avoid a selloff ahead of the Christmas holiday
  • Defensives taking center stage, yet again with groups like Utilities, REITS, Staples leading
  • Healthcare remains one bright spot, having broken out of downtrends since September

Nothing has changed with regards to the thesis discussed last week of Equity indices stalling out and potentially reversing back lower.  This is widely viewed by most as being lunacy in the month of December, but the specific cycles, Exhaustion indicators, not to mention breadth, and momentum all paint this December as being more akin to 2018 than a traditional seasonally bullish period.  At present, little to no real damage has been done to SPX compared to what transpired to broader Equal-weighted indices during late November;  However, until Nasdaq and DJIA can push back to new highs with SPX and breadth can improve substantially, it looks more likely that consolidation and weakness is possible in the short run, before any move back to new high territory.  Defensive outperformance is often a key “Tell” that this December could bring about a bi...

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