InterMarket Analysis Update for Monday March 31, 2025

Link to The SPX Investing Program https://spxinvesting.substack.com/

Intermarket Analysis Update, prepared for Monday, March 31, 2025, provides a comprehensive analysis of the S&P 500 and its relationship with various sectors, indexes, and markets.

1. Valuation Analysis: The S&P 500 is considered expensive, with a current price-to-earnings (P/E) ratio above 20. The Shiller P/E ratio is even higher at 34.75, compared to a mean/median of 16-17. Despite recent declines, the market remains overvalued compared to historical norms and other countries, with the "Magnificent Seven" stocks at a P/E of around 25.

2. Growth vs. Value: In 2025, the market has shifted toward a defensive stance, with value stocks outperforming growth stocks. This trend, evident since December 2024, suggests caution, as growth typically leads in bullish markets. The S&P 500 hit an all-time high on February 19, 2025, but has since pulled back nearly 10%, with a significant drop on the last Friday of the quarter.

3. Inflation Concerns: Inflation fears are rising, supported by an uptrend in the CRB commodities index. However, mixed signals emerge: oil remains below $70, aluminum and wheat are in downtrends, while copper (an economic barometer) is in a strong uptrend, suggesting economic resilience. Gas prices are rising, potentially inflationary, while inflation expectations have ticked up slightly.

4. Other Markets: Precious metals such as gold and silver are in uptrends, with gold recently hitting an all-time high. The U.S. dollar is weakening, falling below its 200-day moving average, while the yen and euro are gaining against it. Bonds are showing strength, with prices rising and yields declining slightly, outperforming stocks in 2025 so far.

5. S&P 500 Sectors: The 11 sectors are analyzed individually and compared to the S&P 500. Defensive sectors such as utilities, staples, and healthcare are holding up better, while growth areas such as tech and discretionary are underperforming. Financials and energy show relative resilience, while semiconductors are notably weak, entering downtrends.

6. Indexes and Correlations: The equal-weight S&P 500 is outperforming the cap-weighted version, reinforcing the defensive shift. Small caps and micro caps are struggling, partly due to higher interest rates. The NASDAQ 100 and tech-heavy indexes are under pressure, while international markets (e.g., emerging markets, German DAX) are performing better than U.S. stocks.

7. Long-Term Trends: Long-term charts show the S&P 500 and NYSE rolling over, with momentum weakening. Stocks are underperforming commodities and bonds, a shift not seen in recent years. Correlations indicate stocks, oil, and yields moving together downward recently.

8. Positive/Negative Summary: Positive indicators include uptrends in copper, gold, silver, bonds, and some broad indexes (e.g., NASDAQ, NYSE), despite recent pressure. Negative indicators include downtrends in semiconductors, small/micro caps, and the euro/pound against the dollar, signaling potential trouble spots.

Conclusion:
The S&P 500 remains overvalued and under pressure, technical analysis and intermarket relationships provide clues beyond valuation. The defensive shift, inflation fears, and mixed global signals suggest a cautious outlook for the near term.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1sEMeOEUlZVr64-G8Ic-aj5HT-EJN5EfJ/view?usp=sharing

My Exclusive Free Workshop: The Four P's of Building a Successful Investing Program → https://spxinvesting.mailchimpsites.com

Free Stock Market Course: https://youtu.be/Bl8XZh1t3DI

Blog: https://spxinvestingblog.com

Facebook Private Group:
https://www.facebook.com/groups/667271964721864

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!