Last week was a wild ride, but it may be the correct medicine for a market that looked healthy on the surface but was deteriorating internally.

When the dust settled, the market staged an impressive rebound on Friday, but it wasn’t enough to offset a sea of red for the week.

Week	Friday

Large Cap Haven

When jailbreak sessions occur, like last Friday, it's important to look under the hood to see where the best action took place.  

Large-cap value took the honors, which tells me serious bottom fishing has begun. It speaks to a desire to be ‘long’ but seek out opportunities for big gains rather than riding the stocks that are already grand slams.

Everything was down during the week, but large-caps were down compared to other factors. It's amazing how badly the small-cap value performed this year against the rest of the market. Everyone on Wall Street was on the bandwagon at some point, partly because it looked like easy pickings.

Bonds Stumble

One reason small caps struggled is the spike in bond yields. The new Federal Open Market Committee (FOMC) reinstates the so-called maturity wall, which means small-cap names will have to refinance debt at higher levels.

Money continues to flow into the stock market.

Big Money Move

Hedge funds are loading up on their short position in U.S. equity.  Maybe it’s a hedge, but the smartest guys in the room have been betting against this rally from the start – and losing big time.

Meanwhile, institutions are dumping money markets, and I have to guess putting that cash into stocks.

Today’s Session

This is a tough week to assess the market, but it's also a good time to zero in on opportunities from things like tax-losses selling and general apathy.

After the shutdown hype, the Fear & Greed Index has climbed out of ‘extreme greed,’ and FOMC pressers have faded away.

I think the Fed underestimates the rut in the labor force, which results from a lack of hiring and not massive firings. The “experts” whine so much about tariffs that it feels disingenuous.

There are compelling economic data releases this week.

Comments

My best Christmas was last Wednesday when my 92 years young husband came out of surgery for a reverse shoulder replacement and he came back to me as he was. Deborah Smith on 12/24/2024 10:43:54 PM

The best Christmas Gift I ever received was on December 25th, 1999 at 3:00 & 3:01 am when my twins (boy/girl) were born. Donald W Trimble on 1/10/2025 6:21:43 PM

My first Barbie doll and this Christmas a windshield shade for my 1984 Mercedes 300D. Not easy to find one that fits! Theresa Norcross on 1/13/2025 11:22:57 AM

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