Today’s market action highlighted ongoing challenges, with the S&P 500 dropping 1.07% and market breadth continuing to show significant weakness. Of the S&P 500, 470 stocks declined, while only 31 advanced, signaling bearish sentiment. Key breadth indicators, such as the McClellan Oscillator (-43) and Summation Index (-351), underscore the fragility beneath headline numbers. Secondary indices like the equal-weighted S&P 500 (RSP) and Russell 2000 (IWM) show sharper declines, down 7.5% and nearly 10%, respectively. Sector-specific weakness is particularly evident in housing (HGX, -18% from peak) and materials (XLB, -15% from peak). Without the support of the “Magnificent Seven” mega-cap stocks, broader market losses would be even more pronounced.

Meanwhile, 10-year Treasury yields fell 9–10 basis points, possibly reflecting rebalancing ahead of year-end. Patterns of early-morning futures selling suggest coordinated flows tied to reallocation efforts. With most global markets closed on December 31, U.S. markets remain a key source of liquidity heading into year-end. As the S&P 500 hovers around key support at 58.75, the formation of a potential head-and-shoulders pattern warrants close attention. Stay tuned for further developments as we enter 2024.

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