S&P 500 Daily Update for Wednesday March 5 2025

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Summary of the Daily Update for Tuesday, March 4th, 2025, covering market action and the outlook for Wednesday, March 5th:
Market Performance: The market experienced another down day, opening with a gap lower and falling below key levels such as 5800 and S1 at 5778 on the S&P 500. It approached within 1% of the 200-day moving average but managed a mid-session rebound back to the unchanged level, briefly turning positive. However, late-day selling ("Smart Money") pushed it back down to close at S1, down 1.22% on above-average volume.
Key Levels: The S&P and NASDAQ 100 are testing their 200-day moving averages. The S&P remains just above it, while the NASDAQ 100 dipped below but closed above it, showing critical support holding for now.
Trends: Short and intermediate-term trends are negative, with the market becoming oversold short-term and showing early signs of overextension in the intermediate term. The long-term trend remains positive but are under pressure as the 200-day moving average is tested.
Sectors and Stocks: All major sectors declined, though Mega Caps and growth stocks (e.g., tech, communication) outperformed relatively, with less severe losses. Small caps and financials were hit hard, with the Russell 2000 down 1.5% and the financial sector dropping 3.5%.
Indicators: The VIX is elevated above 20 (at 23.51%), signaling increased volatility and negative annualized returns. Momentum indicators (e.g., RSI, Stochastics, MACD) are extreme negative short-term and declining intermediate-term. The ADX confirms a negative trend in both timeframes.
Economic Context: Interest rates ticked up to 4.21% after recent declines. The dollar weakened significantly, while oil dropped below $70, raising growth concerns. Geopolitical factors, notably new tariffs (25% on Canada/Mexico, 20% on China) and retaliatory threats, are adding uncertainty post-Trump’s speech.
Key Events and Observations:
President’s Speech: Delivered Tuesday night, it sparked polarized reactions. Futures rose slightly post-speech, but the market awaits Europe’s reaction and overnight session developments.
Tariff Impact: Uncertainty around tariffs and potential trade escalation is a major market driver, with Trump suggesting matching retaliatory tariffs, raising fears of a trade war.
Smart Money: Late-day selling indicates institutional profit-taking or bearish positioning, despite Mega Caps holding up better.
Technical Outlook:
Support Levels: The S&P is less than 1% from its 200-day moving average, a critical long-term support. A break below could signal a correction (10%+ drop from highs) or bear market (20%+ drop). The NASDAQ 100’s recovery above its 200-day average offers some hope.
Oversold Conditions: Short-term indicators suggest the market is oversold, potentially setting up a bounce, but intermediate-term weakness is building.
Volatility: The VIX and related metrics (e.g., VVIX, SKU) remain high, reflecting fear and expectations of a big move.
Wednesday, March 5th Outlook:
Data Releases: Key reports include the MBA Mortgage Applications, ADP Employment Change, ISM Non-Manufacturing (services), and Factory Orders. A weak ISM reading could exacerbate economic fears, while a strong one might stabilize markets temporarily.
Seasonality: Historically, March 5th shows neutral-to-positive tendencies (S&P up 65% of the time), though recent choppiness tempers expectations.
Tariff Fallout: Market reaction to tariff news and global responses (e.g., Europe, Zelensky’s rare minerals talks) will be critical.
Bias: Remains negative short and intermediate-term, with long-term positivity contingent on holding the 200-day moving average. Oversold conditions could prompt a short-term rebound, but momentum favors downside risk without significant buying.
Conclusion:
The market is at a pivotal point, testing major support amid heightened volatility, tariff uncertainties, and mixed economic signals. Wednesday’s data and geopolitical developments will likely dictate whether support holds or further declines ensue.
PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1ODHCw9CaZVl4PWdCf4ESLS3bgB_374sL/view?usp=sharing
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DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!