What to Watch Update for Monday April 7, 2025

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Summary of the "What to Watch Video Update" for Monday, April 7th, 2025:
The update analyzes daily and weekly charts to identify current market trends, categorizing them into positive, negative, and watchlist items impacting the S&P 500.

Positive (Short List):
QQQ vs. Small Caps Ratio: The NASDAQ 100 ETF (QQQ) is outperforming small caps, holding above a key level despite both declining, suggesting relative strength.
Regional Banks vs. Financial Sector Ratio: Although negative overall, this ratio improved slightly on Friday, closing off its lows, hinting at potential capitulation selling that might signal a bottom.
NASDAQ 100 vs. Dow Ratio: Still above a critical support line, indicating resilience despite weakening.
S&P 500 Advancers Minus Decliners (10-day SMA): Below zero but not at an extreme negative, suggesting market rotation rather than a full collapse.
Negative (Long List):
S&P 500 Daily Chart: Dropped below key support levels with increased volume, nearing a bear market (20% decline from February 2025 high, currently at 17.42%). A death cross (50-day SMA below 200-day SMA) looms if trends continue.
Moving Averages: Short-term (20-day) and intermediate-term (50-day) trends are weak, with prices below declining averages. Long-term (200-day) remains positive but threatened.
Sentiment Indicators: Extreme pessimism with a sentiment reading of 4 (contrarian bullish signal), Investor Intelligence at 1 or below, and individual investors extreme negative for six weeks.
VIX: Spiked to 45, signaling high fear (negative for stocks), with momentum (MACD) and RSI suggesting potential overextension.
Growth vs. Value: Value outperforming growth, indicating a defensive market stance, with multiple ratios (e.g., S&P Growth to Value, Discretionary to Staples) declining.
Market Internals: Advance/Decline line, new highs/new lows, and Smart Money Indicators turned negative on Friday, reflecting broad selling pressure.
Trend Indicators: Short, intermediate, and long-term trends are negative and strengthening (ADX above 40 in shorter timeframes), with extreme rate-of-change readings suggesting possible exhaustion.
Technical Patterns: Bollinger Bands, point-and-figure charts, and Fibonacci retracements show rare, extreme negative signals across daily and weekly timeframes.
Sector Weakness: Tech, semiconductors, financials, small caps, and broad market indices (e.g., Wilshire 5000) are underperforming, with some nearing bear market territory (e.g., NASDAQ down over 20%).
Economic Signals: Stocks underperforming bonds, with ratios such as the S&P to staples and tech to bonds declining, hinting at recession fears.
Watchlist:
Employment Data: Strong jobs report on Friday but with downward revisions of previous monthly numbers; weekly jobless claims and continuing claims are stable but watching for recession signals.
Bond Spreads: Rising fear in junk bonds vs. safe bonds, though not at panic levels yet.
10-Year Yield: Dropped below 4%, reflecting a flight to safety; could support stocks if it spurs buying.
Inflation/Deflation: Charts (e.g., CRB Index, TIPS ratios) suggest deflationary pressures, not inflation, contrary to some narratives.
Dollar and Global Markets: Dollar weakening, German market (DAX) also hit but had been outperforming the U.S. earlier in 2025.
Key Takeaways:
The market is overwhelmingly negative, with widespread declines intensified by China’s retaliatory tariffs before the Friday, April 4th, 2025 session. The S&P 500 teeters between correction and bear market territory, with potential capitulation selling offering hope for a bounce, though its quality remains uncertain. Positive signals are scarce, but some ratios and extreme readings suggest a possible short-term bottom, pending confirmation. Economic indicators lean toward deflation and recession risks, requiring close monitoring of employment and bond trends.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1WTdxCN86xpF4Agj0JTr57sBGWMopRZ0a/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!