Santoli’s Tuesday market notes: The S&P 500 hit new highs, but a pause could be around the corner

Published Tue, Dec 28 20211:24 PM EST

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. Market idling at the highs, the S & P 500 tagging 4,800, showing minor signs of "enough for now" as it digests a ramp of nearly 6% from the intraday low five trading days ago. A basic gauge of market position – the index's distance from its 50-day average level – is getting pretty stretched. Similar to how it looked a few times this year – early February, April, July, the start of November. Seasonal dynamics say the upside gets the benefit of the doubt but a little pause, back-filling in coming days or weeks would make sense. Nasdaq megas taking a rest, banks and transports favored – signs of the familiar rotations. Hard to say how much might be left for any "relief" trade as omicron continues to seem like a lot more noise and nuisance than health or economic threat. Continued selling in the lower reaches of the market-cap and YTD performance ranks, micro-caps trading lower, small-cap tech off, cloud ETF down and now 4.3% lower for the month, another 200+ new Nasdaq lows today. Year-end give-up trades. Again, historically January brings a reprieve to the most hard-hit stocks, sometimes traders front-run that, but this area of the market probably isn't going to pace the overall market any time soon. Busted momentum. Other laggard groups of note: clean energy, cannabis, fintech. The old Dogs of the Dow strategy has been pretty disappointing in recent years. Has classically meant buying the ten highest-yielding Dow stocks at year's end. This DJD ETF weights all Dow stocks by yield, highest to lowest, and rebalances twice a year. Proxy for value/slow-growth/cash-cow businesses the market has tended to shun. Here's DJD total return over three years and the current five highest-yielding Dow names: Here's a look at how the buzzy upstart brokers have done vs. the incumbent retail brokers this year. Mostly a matter of wildly overdone valuations for COIN and HOOD at the outset, in a business that's hard to gain an edge in beyond building scale. Market breadth is so-so today, a bit worse than 50-50 volume split. Credit markets are back on the beam. VIX holding around 18, benign but not giving way fast. Basic economic volatility (wide range of 2022 potential paths on growth/policy/inflation) might keep it elevated, plus we did run 1.4% yesterday, and upside volatility can support VIX, too.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, December 7, 2021.

Brendan McDermid | Reuters

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

Market idling at the highs, the S&P 500 tagging 4,800, showing minor signs of "enough for now" as it digests a ramp of nearly 6% from the intraday low five trading days ago.