Deep Dive Update for Monday April 14, 2025

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The Deep Dive Video Update, prepared for April 14, 2025, provides a deep dive into various financial charts analyzed daily, focusing on market trends and volatility. Key points include:

Market Volatility: The week saw significant market fluctuations, with large up and down moves, high emotions, and an elevated VIX (volatility index). The VIX is trending upward but remains in a lower band, potentially signaling a move to a higher range (above 20) if the market continues downward, similar to 2022 patterns.

VIX and Correlations: The VIX peaked above 50 but has slightly declined, with its RSI showing high momentum (reaching 90, now at 37.56). The correlation between the VIX and S&P 500 hasn’t shifted significantly, offering little new insight. The VIX is rising faster than the VVIX indicating market pressure.

Other Volatility Indicators: The SKU index, using out-of-the-money options, dropped below its critical red zone, reducing its relevance for insights. The stock-to-bond volatility ratio is erratic, with rising volatility generally negative for markets.

Market Performance:

Large Cap Growth ETF: Struggling, with prices below moving averages and underperforming since mid-February.

Small vs. Large Caps: Small caps are underperforming significantly, pushing the small-to-large cap ratio higher.

Market Gains: From October 2022 and 2023 lows, the market is up 53.48% and 30.69%, respectively, as of April 11, 2025.

Index Rankings: Six indexes (S&P, Dow, Nasdaq, Nasdaq 100, mid-caps, small caps) are scored from 0-100 based on technicals. The Dow leads at 54 (slightly positive), followed by S&P at 38, Nasdaq 100 at 32.7, Nasdaq at 27.5, mid-caps at 13.9, and small caps at 6.9, indicating broad weakness.

Technical Indicators:

Moving Averages: Short-term (10-50 periods) and intermediate-term (50-100 periods) trends are negative, with prices well below 20, 50, and 100-period moving averages, resembling a "waterfall" pattern.

Bollinger Bands: An extreme negative reading last week (closing below the lower band) has been worked off, but bands continue trending downward.

Landry Light/Proper Order: Both confirm a persistent downtrend with no new insights.

Connors RSI and Bow Tie: No extreme readings; trends remain negative with prices below key exponential moving averages.

Special K: A long-term oscillator showing a negative trend, turning weaker on the weekly charts.

Ichimoku Cloud: Far below the cloud, signaling a strong downtrend with potential resistance if prices rise.

Sector and Global Comparisons:

Nasdaq 100 (QQQs): Volatility spiked (VXN), with a potential "death cross" looming as the 50-period moving average nears the 200-period.

Dow vs. Transports/Banks: Transports and regional banks are underperforming, with regional banks weakening against the broader financial sector.

Global Markets: The German DAX’s correlation with the S&P 500 has neutralized as both markets declined recently.

Bonds and Rates:

Bond Market: A sharp 0.5% rise in 10-year bond yields suggests potential selling (possibly by China or hedge fund issues). Inflation concerns are low per TIPS and bond ratios, but volatility is high.

Yield Curves: The 10-to-2-year yield curve is normal, but the 10-to-3-month curve recently uninverted, signaling a need to monitor for recession risks.

Correlations: Bonds and stocks show neutral correlations, with no major disconnect between interest rates and the U.S. dollar (despite the dollar dropping below 100).

Other Indicators:

S&P 500 Stocks: The percentage above 200-day and 50-day moving averages is below 50, with no extreme readings but slight recovery from lows (e.g., 17.5% for 200-day).

Rate of Change: Long-term charts (250 periods and since 1980) show markets barely holding above neutral, indicating vulnerability.

European Stocks vs. U.S. Bonds: A breakdown in the ratio, though with a recent bounce.

The SPX is in a clear downtrend across short, intermediate, and even some long-term perspectives, with no immediate signs of reversal, although that can change at any time. Volatility remains high, and while some extreme readings have eased, technical indicators broadly suggest caution.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/12BT4KsusneVSG1z-Gww879b4KoHAIAjR/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!