S&P 500 Daily Update for Friday February 21, 2025

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On Thursday, February 20th, the market experienced a pullback after hitting all-time highs on Tuesday and Wednesday. The session saw profit-taking, with an initial lower open and a drop below key support levels (S1 at 6121 and S2 at 6098), briefly falling under 6100. However, support was found around 6080, leading to a recovery that closed just below S1, down 0.43% on above-average volume. Despite the decline, the market remains positive across short, intermediate, and long-term moving averages. Growth underperformed, while discretionary held up better than staples, though both need to regain momentum to push the market higher. Interest rates dropped below 4.5% on the 10-year yield, potentially supporting stocks, while geopolitical and domestic developments (e.g., Russia-U.S. talks, executive orders, DOGE) add uncertainty but haven’t significantly disrupted sentiment.
Key indicators remain mixed but lean positive: The Smart Money Indicators (accumulation distribution, Chaikin money flow, and oscillator) are extreme positive, though pulling back slightly, suggesting a slowdown rather than a reversal. The market anticipates a soft landing, with the dollar and interest rates down, aiding stabilization. Economic data showed initial jobless claims rising to 219,000, continuing claims up to 1.869 million, and the Philadelphia Fed index at 18.1 (below expectations). Leading indicators fell 0.3%, and margin debt is high, signaling caution. Sentiment is neutral (45, down from 48), and momentum is mixed due to the lack of a clear trend.
Sector performance was uneven: energy, healthcare, and real estate rose, while financials saw significant profit-taking after recent strength. Small and mid-cap growth weakened, with small caps crossing into negative territory short-term. Gold rose amid tariff talks, and housing permits increased, hinting at economic growth. The VIX and fear gauges suggest no major panic, though hedging is evident in put-call ratios.
Outlook for Friday, February 21st: The market remains positive but not trending, with a mixed bias and momentum. Upcoming data (S&P Global PMIs, existing home sales, consumer sentiment) is unlikely to shift the narrative significantly. Seasonality suggests weakness in late February, especially in a post-election year, but no major reversal is imminent unless growth continues to falter or The Smart Money Indicators drop sharply. Support levels and moving averages will be key to watch.
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