Master Trader ETF Investment Trader for the Week of 12-22-25

The broader markets were a whiplash last week, ending with powerful reversals and relatively unchanged.

The Dow has been highly erratic, with wide down-and-up swings, but it remains in an uptrend and set new all-time highs last week.

It retraced below the bullish wide-range bar (+WRB), which is often a sign that a trend is failing; however, the highest wide-range bar was preceded by another bullish wide-range bar, and that’s where prices stabilized last week.

If the Dow can overcome those TTs and prices are in an existing uptrend, there is a reasonable probability the Dow could make new all-time highs, which would confirm Santa is coming to town!

Wednesday's plunge was driven by continued weakness in tech, stemming from the AI bubble theme that collapsed Oracle and Broadcom and began to spill over into other tech stocks.

The inflation data on Thursday was lower than anticipated, helping stabilize the markets, and the 6800 high open interest began to pull prices toward it.

Interest rates, as measured by the 10- and 30-year yields, pulled back from their recent moves higher, which also helped the broader markets avoid those higher yields as a headwind.

Upbeat earnings from Micron Technology (MU) also brought life to the beaten-down semiconductors, and while Nvidia (NVDA) moved higher on Friday, it severely underperformed. Considering it was in a Major Support (MS) area, a move higher with the rest of the markets played out.

On Friday, the markets moved up for the first 20 minutes as if they were going to make new all-time highs, but by 10 AM ET, trading began to flatline as if the world had already gone on holiday.

On the economic front, job growth slowed in November as nonfarm payrolls increased by only 64,000 after declining 105,000 in October, according to the Bureau of Labor Statistics.   Additionally, the unemployment rate rose to 4.6% in November, its highest in more than four years.

Trump keeps touting that costs are coming down and the Affordability Crisis is a hoax.  With only 30% of Americans supporting Trump on the economy, they aren’t believing it.

Although consumer sentiment rose in December, it rose by less than expected because of the affordability concerns. The University of Michigan’s final December sentiment index climbed 1.9 points to 52.9, while the median estimate in a Bloomberg survey of economists called for a reading of 53.5.

Health care premiums for more than 20 million Americans will, on average, more than double in 2026, while Congress left Washington for the year without extending Affordable Care Act subsidies.  Rising health care is a real problem that politicians are unable to address.  This will force talk of another government shutdown in January and likely hurt Republicans in next year’s mid-term elections.

This is a holiday-shortened week: Markets close early on Wednesday at 1 PM (Christmas Eve), are fully closed on Thursday (Christmas), and open on Friday all day, but trading is thin and typically finishes by noon.

Trading volume is expected to be thin, increasing the potential for outsized moves on low liquidity. Hopes are for a traditional Santa Claus rally.

The pullback in the NASDAQ 100 of about 5% and about 10% in semiconductors was enough to push sentiment gauges toward a bullish level, but not quite all the way there.

Breadth retraced to a neutral level of zero, and historically, after moving as sharply higher as it did a couple of weeks ago, the zero level is where markets turn up.

There are economic reports on Tuesday, and while they are unlikely to be significant influences, they could be the excuse to move the markets higher.

Considering it’s a holiday week and nearing the end of the year, there should be little risk of a significant move lower and a greater probability of moving higher toward overhead resistance.

If you're not in the Green Room with us, log in to YouTube, Facebook, or Twitter to get our pre-market review at 9 AM ET. If you can't make it, you can view the recording.

Good trading.

TREND MATRIX

I reviewed the Trend Matrix in the video below

S&P Sector ETFs – Sorted by Weekly Percent Change

Other ETF Sectors – Sorted by Weekly Percent Change

VIDEO REVIEW OF ETF SECTORS - Click lower right to open Full Screen.

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