S&P 500 Daily Update For Monday May 5, 2025

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Daily Update for Monday May 5, 2025
Market Overview:
Positive Day: The stock market reacted favorably to a stronger-than-expected employment report, alleviating concerns about economic weakness, for now. Stocks rose, with the S&P 500 gapping higher at the open, surpassing R1 (5643) and R2 (5682), hitting resistance at the psychological 5700 level, and closing slightly above R2, up 1.47%.
Mixed Signals: Despite the positive day, the market has been choppy recently with mixed technical indicators, making trends hard to discern. Volume was below average, surprising for a key economic report day, suggesting less conviction despite FOMO-driven buying.
Economic Context:
Employment Report: Non-farm payrolls added 177,000 jobs (vs. 130,000 expected), but prior month revisions downward (228,000 to 185,000) tempered enthusiasm. Private payrolls beat expectations (167,000 vs. 125,000), hourly earnings rose 0.2% (below 0.3% expected), and unemployment held at 4.2%. These numbers suggest stability but not robust growth, reducing recession fears for now.
Inflation and Rates: Inflation concerns eased slightly after a Thursday report suggested stability. Interest rates ticked up (10-year yield at 4.32% from 4.23%), but the bond market has stabilized, which the stock market favored. The yield curve (10-year vs. 3-month) is now flat, a shift from inversion.
Tariffs and Policy: Positive sentiment around potential trade talks with China and tariff policies from Washington contributed to optimism, though uncertainty persists.
Technical Analysis:
Short-Term: Positive momentum with indicators such as Stochastic StochRSI, Williams %R, and CCI showing strength but nearing overbought levels. The advance-decline ratio and other short-term indicators (e.g., rate of change, slope oscillator) suggest potential short-term exhaustion.
Intermediate-Term: Improved, with indicators such as the CMB composite, Connors RSI, and McClellan oscillator showing strength, though some are extreme.
Long-Term: Remains negative as the S&P is below the 200-day moving average, indicating a broader downtrend.
Resistance: The S&P hit resistance at 5700, with potential overhead resistance at the 200-day moving average if it breaks through. Fibonacci retracement levels (61.8%) also align with resistance, raising caution after nine consecutive up days.
VIX: Dropped to 22.68, still above 20, indicating lingering caution but declining fear.
Sector and Stock Performance:
Sectors: All sectors were positive, with financials, tech, discretionary, and communication performing well, signaling growth-oriented optimism. Defensive sectors (staples, utilities, real estate) lagged, which is positive in a risk-on environment.
Earnings: Apple and Amazon earnings were poorly received, but the market’s resilience despite their underperformance is seen as a positive sign.
Magnificent Seven: Mixed performance (e.g., Netflix hit another new high, Apple down 3.74%), but they remain critical to NDX and S&P performance.
Other Markets:
Dollar: Slightly down, just above 100.
Bonds: Stabilizing after volatility, with yields rising modestly.
Gold and Oil: Gold declining as stocks rise; oil dropping to the high 50s.
Bitcoin: Nearing $100,000, facing resistance.
Outlook for Monday, May 5, 2025:
Short-Term: Positive but overbought, with resistance at 5700 and potential for profit-taking after a strong run.
Intermediate-Term: Improving but with some extreme readings, suggesting caution.
Long-Term: Still negative due to the 200-day moving average and downtrend.
Key Data: ISM Services PMI on Monday could impact markets (below 50 signals contraction). Fed meeting and press conference on Wednesday unlikely to change rates but may provide guidance. Geopolitical developments could also sway sentiment.
Seasonality: May is historically positive (up 90% of the time with a median return of 1.1%), but May 5th is neutral to negative.
Concerns:
Overbought short-term indicators and resistance levels suggest a potential pullback.
Below-average volume on a key report day raises questions about conviction.
Long-term negative trend and economic risks (e.g., employment weakening) linger.
Defensive sector underperformance is positive now but could shift if risk-off sentiment returns.
Conclusion: The market is in a positive short- and intermediate-term phase, driven by a solid employment report and stabilizing bond markets, but overbought conditions, resistance at 5700, and long-term bearish signals warrant caution. Monday’s ISM Services data and geopolitical developments will be key to watch.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/1PzXBMw8pkROaOalo5nXM_VyXI6aR_fS1/view?usp=sharing

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!