S&P 500 Daily Update for Friday May 2, 2025

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

Market Summary for Thursday, May 1, 2025, and Outlook for Friday, May 2, 2025
Thursday Market Recap:
Performance: The market experienced an up day, closing at the day's low after gapping higher at the open. The S&P 500 rose 0.63%, ending slightly above 5,600, driven by gap-up open following positive earnings from Microsoft and Meta.
Technical Indicators:
The S&P is now above the 50-period moving average, signaling positive short- and intermediate-term trends, but remains below the 200-day moving average, indicating a negative long-term trend.
Pivot points: Opened at R1 (5623), hit an intraday high above 5650, but closed below R1 after a late sell-off.
Volume was below average, and volatility (VIX) was at 24.6, elevated but declining, suggesting reduced fear.
Momentum and Sentiment:
Short-term indicators (e.g., Stochastics, StochRSI, CCI 14 & 20, Williams %R) show strong positive momentum, though some are nearing overbought levels.
Intermediate-term indicators (e.g., TTM Squeeze, CMB Composite) are positive but show signs of becoming extreme positive.
Sentiment improved to 47% (neutral), but the 10-year to 3-month yield curve remains inverted, a recession warning.
Economic Data:
Unemployment claims rose to 241,000 (from about 220,000), and continuing claims increased to 1.9 million, raising concerns about employment trends.
ISM Manufacturing PMI was 48.7 (below 50, indicating contraction), though slightly better than expected.
Construction spending fell 0.5% (vs. expected +0.3%).
Market Drivers:
Positive earnings from Microsoft and Meta fueled the gap-up open.
The Bond market reacted positively to potential economic weakness, anticipating a Federal Reserve rate cut due to slowing growth, though this could signal recession risks.
Trade war optimism and tariff news provided some encouragement, though specific details remain unclear.
Key Concerns:
The market closed at the day's low, raising the possibility of an island reversal pattern, which could indicate a short-term top.
Employment data is a focal point, with rising claims suggesting an economic slowdown.
Despite positive momentum, the market looks "toppy" in the short term, with mixed sentiment (some expect a rally, others a decline).
The long-term trend remains negative, with the ADX still showing a weakening downtrend.
Friday Outlook:
Key Event: The employment situation report is critical. Expectations are for an unchanged unemployment rate (4.2%) and 130,000 new jobs. A weak report could heighten recession fears, impacting stocks negatively but potentially boosting bonds.
Other Data: Factory orders are unlikely to significantly move markets.
Geopolitical/Political Risks: Announcements regarding trade wars or tariffs could influence sentiment.
Seasonality: May historically marks the start of a weaker period for stocks ("sell in May and go away"). Post-election years show May as the fourth-best month (+1.6% average), but recent trends suggest caution or a decoupling from historic norms.
Technical Outlook:
The S&P is positive in short and intermediate terms but overbought short-term. Staying above 5,600 and the 50-day moving average (5592) is key to maintaining the bullish momentum.
A close above 5,575 on the weekly chart would strengthen the longer-term outlook.
Watch for follow-through on growth sectors (tech, discretionary) outperforming defensive sectors (staples, healthcare).
Risks:
A disappointing employment report could trigger selling, especially with the market near resistance levels.
Choppy trading is possible due to mixed signals and overbought conditions.
The gap from Thursday’s open may act as a magnet for a pullback if momentum fades.
Conclusion:
The market is positive in the short and intermediate term, driven by earnings and Fed rate cut hopes, but faces challenges from overbought conditions, a potential economic slowdown, and longer-term bearish signals. Friday’s employment report will be pivotal in determining near-term direction. Investors should monitor key levels (5,600, 50-day MAs) and sector performance for signs of sustained strength or reversal.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/1q8urxw8ViYm4DkFwGe3dRFI1wFExyEHB/view?usp=sharing

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