Breaking bull

This week’s Fab Five Fundamentals highlights a series of notable market breakouts—from M&A activity and tech dealmaking to financial strength and copper’s surge. Together, these moves suggest a broadening backdrop that could shape the market’s direction heading into year-end.

1 - Banker break-out

Announced M&A volume in 4Q25 QTD trends remain strong at +50% y/y, with strategic/sponsor volume up +57%/+37% y/y. Surging M&A naturally bullish for stocks.

Source: Morgan Stanley

 

Tech too

"U.S. tech mergers rebounded to their highest levels since 2021 this year, driven by big bets on AI and more tie-ups under a deal-friendly presidential administration. Total tech merger value reached $543 billion, more than the combined value of the past two years"

Source: The Information

 

2 - The bank break-out

US big financial institutions trading strong. This is a new ATH. Financials doing well = economy doing well = stock market doing well. We also like the broadening of the rally.

Source: Bloomberg

 

3 - Dr Copper

Copper prices in London hit a record $11,620 per ton on Friday. Prices have risen over +30% this year. A lot is supply driven, but a break-out is a break-out is a break-out and this is bullish.

Source: CITI

 

4 - Breath breaking out

S&P 500 breadth: 10 day moving average of daily advancers.

Source: Citadel

 

When the advance-decline ratio breaks out

"Not a typical indicator for us to look at, but this week we tallied the daily advancers and decliners for the SPX going back over several years. When aggregating the net amount on a cumulative basis, and interesting pattern emerged. It’s not unusual for the SPX to have bouts of flattish performance coincident with flat spots for the advance-decline line. More interestingly, when the advance-decline line breaks out of a flat spot and reaches a new high (as it has done this week), it tends to correspond with sustained rallies for the SPX. We zero’d in on the last 5Y to illustrate recent examples of this behavior."

Source: Jefferies

 

5 - This could be the mother of all break-outs

"Over the past 150 years, U.S. growth has stayed remarkably close to a 2% trend even with past technological revolutions. We think it’s conceivable that accelerating AI-driven innovation could boost growth above that trend."

Source: BlackRock

 

And two bonus ones

6 - Q4 EPS revisions

Not a breakout per se but at least breaking the trend. During the first two months of a typical quarter, analysts usually reduce earnings estimates. That was not the case in Q3 and it was not the case in the current quarter. 

Source: FactSet

 

7 - Follow the money

Continuously breaking higher and higher. U.S. M2 Money Supply hits new all-time high of $22.3 Trillion.

Source: @barchart