Market analysis for Dec. 8th, 2025

FOMC this week.

Welcome back to a new week of trading. I hope your weekend went well. We had a church Christmas party on Sat. and an extended family party (62 relatives!) on Sun. so I'm a bit Christmas'ed out! 
This week we get FOMC on Weds. and another rate cut looks likely. The focus should be on the FEDS ' looking comments about 2026. How many rate cuts will we get?

We had an excellent run of profit last week. Our ATM portfolio continues to power into the close of 2025 and should, once again, beat the SP500 for return. In spite of the fact that price action was muted most of last week, our day trades all worked as well. Here's a look at our Friday results. Our end-of-day .40-cent trade turned in a 350% gain, which helped.

Let's take a look at the markets: Technicals are still hanging onto the buy mode signal.

Markets seem to be waiting around for FOMC to drop. The question is, has the rate cut already been priced in?

​SPY was the weakest of the major indexes last week, finishing nearly unchanged at $685.69 (+0.33%). However, the Chande Absolute Trend Strength (CHATS) Indicator turned candles green for the first time in weeks, reflecting a shift toward strengthening momentum and renewed trend persistence. With SPY pressing toward all-time highs, a fresh CHATS flip often signals the early stages of a re-acceleration phase rather than exhaustion.

QQQ led the major indexes last week, closing at $625.48 (+1.00%) and finishing Friday with a green CHATS candle. The Polymarket rate-cut odds have surged since late November and recently crossed above the odds of no cut. This shift in expectations helped reinforce the bullish reversal, supporting continued risk-on positioning in growth and tech ahead of the upcoming FOMC decision.

Small caps continued to show strength last week, with IWM closing at $250.77 (+0.84%) and pressing just below all-time highs. As one of the most rate-sensitive equity groups, IWM has been quick to respond to the sharp rise in Polymarket rate-cut odds over the past several weeks. With the FOMC decision just days away, the question now is whether a highly anticipated cut becomes a sell-the-news event or if improving rate expectations fuel a breakout to new highs.

​The latest SPX breadth readings show short-term participation beginning to firm up, with the number of stocks reclaiming their 5-, 20-, and 50-day SMAs ticking higher after a period of compression.
While none of the breadth measures are signaling an extreme, the upward curl across all three windows suggests improving internal momentum rather than a narrow, index-driven move.
In the short term, continued follow-through in the 5-day SMA breadth is a key sign to watch, sustained expansion there often precedes broader strength in the 20- and 50-day cohorts.
Conversely, if these small upticks stall or roll over, it may indicate the rally is losing participation under the surface even if headline price holds steady.

Let's look at the weekly expected move in the SPX. Sitting at a 1.16% expectation. That's low for an FOMC week.

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​December S&P 500 E-Mini futures (ESZ25) are up +0.12%, and December Nasdaq 100 E-Mini futures (NQZ25) are up +0.23% this morning, pointing to a higher open on Wall Street as investors look ahead to the Federal Reserve’s final monetary policy committee meeting of the year, where another rate cut is widely expected.
In Friday’s trading session, Wall Street’s major equity averages ended in the green. Ulta Beauty (ULTA) surged over +12% and was the top percentage gainer on the S&P 500 after the retailer reported stronger-than-expected Q3 results and raised its full-year guidance. Also, chip stocks gained ground, with Micron Technology (MU) rising more than +4% and GlobalFoundries (GFS) advancing over +3%. In addition, Warner Bros. Discovery (WBD) climbed more than +6% and was the top percentage gainer on the Nasdaq 100 after Netflix agreed to acquire the company for about $72 billion. On the bearish side, DocuSign (DOCU) slumped over -7% after the software company issued soft Q4 revenue guidance.
Data from the U.S. Department of Commerce released on Friday showed that the core PCE price index, a key inflation gauge monitored by the Fed, rose +0.2% m/m and +2.8% y/y in September, compared to expectations of +0.2% m/m and +2.9% y/y. Also, U.S. September personal spending rose +0.3% m/m, in line with expectations, and personal income grew +0.4% m/m, stronger than expectations of +0.3% m/m. In addition, the University of Michigan’s preliminary U.S. consumer sentiment index rose to 53.3 in December, stronger than expectations of 52.0. Finally, U.S. consumer credit rose by $9.18 billion in October, weaker than expectations of $11.8 billion.
“Overall, the [PCE Inflation] data was consistent with another 25 basis point Fed cut [in December], but it doesn’t suggest any urgency for the Fed to accelerate the pace of cuts in 2026,” said BMO’s Ian Lyngen.
The Federal Reserve’s interest rate decision and Chair Jerome Powell’s post-policy meeting press conference will take center stage this week. The central bank is widely expected to cut the Fed funds rate by 25 basis points to a range of 3.50% to 3.75%, especially after last week’s ADP payroll report pointed to falling private-sector jobs. “Momentum is now firmly behind a third 25 basis-point easing for the year. While there is some nervousness about the potential for inflation to remain elevated due to tariff-induced price hikes, the news on the jobs market is increasingly concerning,” according to ING economist James Knightley. With next year’s rate path uncertain, Mr. Powell’s remarks will be closely monitored. Market watchers will also scrutinize the Fed’s quarterly “dot plot” in its Summary of Economic Projections, as they look to gauge how quickly and how far interest rates will fall next year.
Investors will also keep an eye on U.S. economic data this week. The U.S. JOLTs Job Openings for October and weekly jobless claims will provide investors with additional insight into the health of the labor market. Notably, the October JOLTs report will include figures for September. Other noteworthy data releases include the Employment Cost Index, Unit Labor Costs (preliminary), Nonfarm Productivity (preliminary), and Trade Balance.
In addition, several prominent companies, including Broadcom (AVGO), Oracle (ORCL), Adobe (ADBE), Costco (COST), and AutoZone (AZO), are slated to release their quarterly results this week.
On Friday, the Fed’s blackout period ends, with central bank officials Paulson, Hammack, and Goolsbee set to deliver remarks.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.151%, up +0.27%.

Let's take a look at our intraday /ES levels. It was a very quiet overnight session. We may be able to get another Theta fairy working tonight. 6894, 6900, 6905, 6911, 6925 are resistance zones. 6884, 6880, 6875, 6871, 6864 are support.

Let's see if we can repeat last weeks string of success's. I look forward to seeing you all in the live trading room shortly!