STOCKS ENDING TRADING WEEK ON A STRONG NOTE -- S&P 500 NEARS OLD HIGH -- SEASONAL TREND REMAINS POSITIVE -- BUT MARKET BREADTH LAGS BEHIND

STOCK INDEXES GAIN GROUND... Stocks are ending the trading week on a strong note as shown in the three charts below.   The most notable one belongs to the S&P 500 in Chart 2 which is nearing a test of its old high.   Ten of eleven stock sectors are also gaining ground led by consumer discretionary, industrials, and materials.  Defensive sectors like real estate, utilities, and consumer staples are lagging behind.

SANTA CLAUSE RALLY IN PLAY...The traditional Santa Clause rally usually gives a boost to the market during the last couple of weeks of the old year; and may be one of the factors driving stocks higher.   That doesn't, however, mean the stock rally is on solid technical footing.   Various measures of market breadth are lagging behind,

MARKET BREADTH LAGS BEHIND... Chart 4 shows the S&P 500 percent of stocks above 50-day averages (through yesterday) at 57% and well off its highs.   The percent of S&P stocks above 200-day averages through yesterday stands at 68%.   Both measures of market breadth have a lot of catching up to do.   So does the advance decline line.  Chart 5 shows the NYSE Common Stock Only Advance-Decline Line (through yesterday) also well off its highs and remaining below both of its moving average lines.   It too has a lot of catching up to do to support the holiday rally.