Tech Heavyweights Are Dragging Indices Lower, But Breadth Tells a Different Story

GNG Research | December 17, 2025 Here’s the uncomfortable truth about this December pullback: the Mag 7 names that account for roughly 25% of the S&P 500 are getting hit, and that’s creating the illusion of a worse market than what’s actually happening underneath the surface. I’ve been watching AVGO, NVDA, MSFT, GOOGL, and AAPL closely. They’re all showing weakness and haven’t stabilized yet. That’s the headwind. But when I look at the breadth data, I’m not panicking. In fact, I’m cautiously constructive for a year-end push higher. What the Index Decline Is Really Telling Us The S&P 500 has now retraced about 50% of the rally from November 20th. With the index trading around 6,721 as I write this, we’re sitting uncomfortably close to that psychological inflection point. My line in the sand? The 61.8% Fibonacci retracement near 6,670. If we hold above that level, dip-buyers have a solid risk/reward setup. Below that, and we’ve got a different conversation entirely. The setup feels eerily similar to December 2024. Many investors have already forgotten that last December was choppy too, not bullish. The market dropped roughly 2.5% before bottoming in mid-January and then rallying into early February. History doesn’t repeat perfectly, but the rhyme is hard to ignore. Breadth Is Actually Improving, Not Collapsing This is where the nuance matters. Last year, breadth was absolutely abysmal heading into November. The percentage of stocks above their 200-day moving average plummeted to the lowest levels of the year, which was a clear warning sign of the correction that followed. This year? Different setup. That breadth gauge has actually improved from the high 40s a few weeks ago to 58% now. That’s not a number that screams “run for the exits.” It’s a number that suggests the broader market is healthier than the index-level pain would indicate. Here’s the other thing that gives me confidence: defensive sectors have been underperforming the last few weeks, not showing relative strength. When money isn’t hiding in utilities and staples, that tells me institutions aren’t positioning for a prolonged drawdown. Small and Mid-Caps Are Telling a Bullish Story While NVDA is down another 3.5% and everyone’s fixated on big tech, IWM, MDY, RSP, and IYT have all broken out. Those are small-caps, mid-caps, equal-weight S&P, and transports respectively. That’s not a coincidence. Those breakouts happened since November 20th, and they suggest the market is rotating rather than rolling over. My read: favor small and mid-cap exposure for now until the heavy index constituents find their footing and turn higher. The mega-cap tech names probably need a few more days to digest, especially as we work through December expiration. But the underlying market structure isn’t broken. ORCL: Getting Close to a Tactical Buy Zone Oracle is one name on my watchlist that’s approaching interesting levels. The stock has been hammered lately, dropping from a September high near $346 to around $184 today. That’s a brutal 47% drawdown for a name that’s supposed to be a stable large-cap tech play. ORCL shows a Piotroski F-Score of 4, which is mediocre. ROIC sits at 12.4%, decent but not exceptional. Forward P/E at 23.7x with 17.4% expected 5-year EPS growth gives you a PEG ratio around 1.6. The Altman Z-Score of 2.6 puts it in the “gray zone,” neither distressed nor bulletproof. Mean analyst target price? $339.81, which implies significant upside from current levels. But here’s the technical setup I’m watching: the $172-173 zone looks like potential support based on time and price confluence. If ORCL reaches that level in the next 3-5 trading days, it would represent a 50% absolute price retracement from its September intraday high of $345.72. Elliott wave patterns suggest we’re in the final stage of a five-wave decline, which is constructive short-term but also warns that any bounce might not make it bac