Either the rally broadens or the entire market is vulnerable, says Vital Knowledge's Crisafulli

Let's break down today's market action with you. We got Adam Christofoli of Vital Knowledge and Sam Stovall of CFRA Research, both with us, kick things off. Sam, it's great to have you on. Listen, NASDAQ technology, and I'm doing the hand motions, going way up the Dow eight-day losing streak. Do we care about the Dow or why it's not participating? Yeah, Brian, I guess the Dow is emulating the Beatles song, eight days, it's been weak. But I think the focus primarily is on the very narrow market that we're seeing right now, which really is dominated by technology, consumer discretionary, also looking at communication services, et cetera. So right now we've been seeing the participation rate pretty much fall off the peak that we saw back in the end of November. 76% of the S&P 1500 sub-industries were above both their 50 and 200-day moving averages. Now that number is closer to 40%. Yeah, I guess I will, Gil, paraphrase another Beatles member and say, while my investor gently weeps, because if you look at certain parts of the market, maybe not the Dow, I get it. Nobody invests around the Dow. It's like a headline thing. But if you weren't in big cap technology, you've done okay this year, but you're doing about as well as you're up. I hate to ask the same question for the millionth time, but can really the same couple of stocks continue to power us higher? Adam? Go ahead. No, I mean, I think that's a great question. And the weak breath, especially in the last several weeks, we had a big zoom right after the election, and now you've really had a notable bifurcation where it's really just the mega cap tech stocks that are leading on the upside. The equal weight S&P is trading very poorly. A lot of the key sickle groups are trading poorly. And I think another year to expect that these names, those tech mega caps will be up another 20 plus percent while the rest of the market lags. I think that's asking way, way too much. And so I think at one point, either the rally has to broaden or the entire equity market's gonna be vulnerable on the downside. Adam, I'll go back to you. Why is it that you're very bullish? That's great. We like to hear it. We want stocks to go up, not to go down. Why so bullish though? I mean, what's gonna be the big driver of all the new money? Because stocks only go up when there are more buyers than sellers. No, so I think it's more of a broadening of the market versus kind of just a concentration in these several names. And I think the big driver of that is going to be, you know, just the healthy macro backdrop presently. So decent growth, we still have disinflation, we still have monetary support. Now the disinflation and monetary support, they're not gonna be as dramatic as they have been. The Fed easing pace is gonna slow a lot. The CPI, the PCE, they're not easing from their highs as robustly as they have been, but they're still moving in the right direction. Growth is healthy right now. Earnings are healthy. And you still have some support from the incoming administration, especially on the regular M&A front. I suspect you're gonna see a big explosion in M&A volumes in the coming year. Yeah, I guess, Sam, your job is to, well, you're paid for a lot of things, but you're also paid to worry. So there is no market without some fear. I mean, although it feels like this market is a market without fear, but you get my point. What is the risk? If you had to mark down the biggest risks heading into 2025, what would they be? Well, yes, the market does like to climb a wall of worry. And actually, historically, following an up year in the S&P, you want to let your winners ride. The top three sectors in the prior year tend to outperform the market in the subsequent year by an average of about 300 basis points and does so 75% of the time since 1990. But if you are gonna worry about something, it is that the tariffs are not just talk, but are truisms, and that we will actually be putting up barriers to trade. And if that is an actuality, I think that could be a very big problem. Yeah, I mean, we talk about tariffs all the time, Sam. Nobody's really talked about, we talk about the implication on product prices. We talk about the implication maybe on tax revenues, receipts. We don't talk as much about the potential implication on the equity market. Is that because we don't know, we can't quantify it, or maybe there isn't one? Well, I think it's because most investors regard Donald Trump as a capitalist and therefore would really not want to knowingly undo the benefits of trade. And so I think he just wants to put it on an equal footing. And as a result, most people on Wall Street don't take him necessarily at his word, but rather at his intent.