For the past 14 days, more S&P 500 stocks have gone down than those that have gone up.
A lackluster Santa Claus rally this year might make problems with the overall market worse, according to NDR.
The stock market had a hard week, and it could have a tough year in 2025 too.
The market is likely to have its worst week since March 2023 because the Federal Reserve said it may not cut interest rates until 2025. Looking at how the market is working, it's obvious that problems started happening before the Fed's meeting on Wednesday. This is a sign that difficult times are coming.
On Thursday, the number of stocks in the S&P 500 that went down was more than the ones that went up for 14 days in a row.
The data showing how many stocks are going up or down helps us understand what's happening in the market. Recently, it's been weak, which means that even though the S&P 500 is only down 4% from its highest point, there are some problems beneath the surface of this main index.
This shows that the equal-weighted S&P 500 index is down 7% from its highest point.
Ed Clissold, the main US strategist at NDR, says that the S&P 500's advance-decline line has experienced a 14-day losing streak, which is the longest since October 15, 1978.
Clissold said that when there are 10 or more days in a row where more stocks go down than go up, it can be a sign that future stock market returns might not be good.
This situation has happened only six times since 1972, and it shows weak future performance for the S&P 500. After these 10-day periods of losing momentum, the index usually sees an average return of just 0. 1% over the next six months. In contrast, it normally gains about 4. 5% during other times.
"Having only six cases doesn't really create a good plan. " Market highs have to begin at some point, and many times they start when most stocks aren't doing well, even if the main averages are increasing, Clissold said.
What might be more important for the stock market is whether it can bounce back as it approaches a time of year when stocks usually do well, known as the Santa Claus trading period.
If it can't do that, it would be a sign, Clissold says.
"The absence of a Santa Claus Rally would be worrying, both during this holiday season and because it could make the differences in market performance even bigger," the strategist said.
Clissold is also worried about how investors feel, as they have shown very positive feelings since September. A research company found that people are feeling very positive about the market, and this period of optimism is one of the longest since 1995.
"Clissold said that many surveys show levels that might not last. He warned that if people's feelings change, it could be a bad sign for future market performance. "
In the end, if the stock market keeps struggling, especially behind the scenes, Clissold thinks that 2025 will be harder for investors than 2024.
"If the stock market doesn't fix the recent issues in the next few weeks, it could mean our worries about a tougher 2025 might come true," the strategist said.
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