Stock Market & Crypto Analysis for Week Ending December 12, 2025

Market Analysis - December 12th, 2025 - Brian Shannon (alphrends.net)

Key Concepts:

• Anchor VWAP (Anchored Volume Weighted Average Price): A VWAP calculated from a specific significant low, used to identify potential support and resistance levels.
• Declining Moving Averages (5-day, 20-day, 50-day, 200-day): Moving averages sloping downwards, indicating bearish momentum.
• Inverted Head and Shoulders Pattern: A bullish reversal pattern characterized by three lows, with the middle low (the "head") being the deepest.
• Bearish Flag: A chart pattern indicating a temporary pause in a downtrend, often followed by a continuation of the downward movement.
• Santa Claus Rally: A potential market increase during the last five trading days of the year and the first two of the new year.
• Guilty Until Proven Innocent: A trading philosophy where assets below declining moving averages are considered bearish until evidence suggests otherwise.

I. Broad Market Overview (S&P 500 & NASDAQ)

The overall market exhibited losses this week, despite gains in Bitcoin and Ethereum. The S&P 500 reached a key level – the anchor off a recent low, coinciding with the daily S2 level – and experienced a bounce, but remains below the declining 5-day moving average and the month-to-date anchored VWAP, suggesting caution. Brian Shannon anticipates being on vacation next week and humorously expresses a desire for the market to decline further, testing the 50-day moving average, before stabilizing and forming a right shoulder in a potential inverted head and shoulders pattern, allowing for a buy opportunity upon his return. However, he emphasizes the market doesn’t cater to personal preferences.

The NASDAQ is in a more precarious position, intersecting with the 20-day, 50-day moving averages, and an anchor off last month’s low. Being below a declining 5-day moving average necessitates a defensive approach. A rally would require several days to establish, needing the 5-day moving average to flatten and prices to move above it.

II. Russell 2000 Performance

The Russell 2000 bucked the trend, breaking to a new all-time high and holding that level. Prior resistance is currently acting as support. However, Shannon cautions against complacency, stating “Winners don't take care of themselves. They need to be managed.” A pullback to the anchor off the recent low, coinciding with the 20 and 50-day moving averages, is possible, potentially leading some to believe the breakout has failed. Traders are advised to have a defined stop-loss strategy based on relevant higher lows.

III. Semiconductor Sector & Nvidia Analysis

The semiconductor sector was the biggest loser, down 4.5%, prompting a focus on Nvidia. Nvidia is described as “a mess,” exhibiting a non-bullish chart. The recent rally from last week’s low stalled at the declining 50-day moving average and is now below a declining 5-day moving average. A potential decline to the 200-day moving average near $160 (a 10% drop) is considered plausible. The principle of “guilty until proven innocent” applies as long as Nvidia remains below the declining 5-day moving average, compounded by the declining 20 and 50-day moving averages. The semiconductor index as a whole is also below the declining 5-day moving average.

IV. Potential Market Patterns & Scenarios

Shannon outlines two potential scenarios for the semiconductor index. The first, a bullish scenario, involves buyers stepping in, the market stabilizing, and a move back above the rising 5-day moving average, potentially leading to a rally into mid-to-late next week. The second, more common scenario, involves a potential double top formation. He clarifies the definition of a double top (Point A, Point B, Point C, often with Point C slightly exceeding Point A), and the subsequent breakdown to the trendline, resulting in a measured move of 60 points down from 315 to 250. He stresses this is not a prediction, but an educational explanation of the pattern. He emphasizes focusing on the response to the anchor off the recent low, the 20 and 50-day moving averages. A rally towards this level should be viewed with caution, as a potential trap below the 5-day moving average could lead to a reversal.

V. Crypto Market Analysis (Bitcoin, Ethereum, Solana, XRP)

Bitcoin: Bitcoin experienced a slight increase in value but showed no significant chart progress. The anchor off the September 2023 low continues to provide support. Shannon anticipates a potential test and slight undercut of this anchor and the previous low around 75,000, potentially triggering stops and frustration before a bearish flag pattern plays out. The path of least resistance, indicated by declining 200-day and 50-day moving averages, is downwards.

Ethereum: Ethereum is described as an “ugly mess,” making higher highs and higher lows within a larger decline. A breakdown is considered more likely than a rally towards the 100 level, contingent on Bitcoin’s performance.

Solana & XRP: Solana and XRP are presented as relatively stagnant, with potential breakdown levels identified around specific price points (Solana – unspecified, XRP – 175). Caution is advised for these cryptocurrencies.

VI. Other Notable Trades & Positions

Shannon mentions ongoing profitable trades in Cisco (down to a quarter position from an entry of $720) and a partial position in another stock (unnamed) from an entry point of $63.

VII. Santa Claus Rally & Final Thoughts

The potential for a “Santa Claus Rally” (the last five trading days of December and the first two of January) is acknowledged, but the burden of proof currently lies with the buyers, given the prevailing bearish conditions below declining 5-day moving averages. He highlights a visual indicator – a red-colored declining 5-day moving average – used to quickly assess bearish conditions across various indices (SPY, NASDAQ, Semiconductors). He reiterates the importance of knowing stop-loss levels and managing positions, particularly in the Russell 2000 despite its recent strength.

Data & Statistics:

• Semiconductor sector down 4.5%.
• Potential Nvidia decline to $160 (10% drop).
• Double top measurement: 60 points from 315 to 250.
• Santa Claus Rally: December 24th, 26th, 29th, 30th, 31st and January 1st & 2nd.

Conclusion:

The market currently presents a cautious outlook, with several indices below declining moving averages. While potential bullish patterns exist (inverted head and shoulders, Santa Claus Rally), the prevailing trend suggests a higher probability of continued downside. Disciplined risk management, defined stop-loss strategies, and a focus on key support and resistance levels are crucial for navigating the market in the coming week. The Russell 2000 remains an exception, but even its strength warrants careful monitoring.