S&P 500 Daily Update for Tuesday May 6, 2025

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

Summary of the Daily Update for May 5, 2025, and Outlook for May 6, 2025:
Market Recap (May 5, 2025):

The market experienced a pullback after nine consecutive up days, described as a "Seinfeld day" where little significant action occurred.

The pullback was not unexpected due to overhead resistance and extreme positive short-term indicators, prompting profit-taking.

The day started with a gap lower open (futures about -0.75%), dropped below S1 (5652), found support at Friday’s pivot, climbed to Monday’s daily pivot (5677), but saw late-day selling, closing below S1, down 0.64% on below-average volume.

Short and intermediate-term trends remain positive (above 20- and 50-period moving averages), but the long-term trend is negative (below 200-day moving average, with 50-period below 200-period).

Interest rates rose to 4.34% (still below 4.5%), requiring monitoring after recent bond stabilization. Geopolitical concerns (China-U.S. trade, Middle East tensions) and oil prices falling to $57 (OPEC+ increasing production) were noted.

Mega caps and growth stocks underperformed, and the VIX rose to 23.64% (above 20, signaling caution).

Short-term indicators (e.g., StochRSI, Williams%R, CCI, Stochastics) showed positive but extreme readings, while intermediate-term indicators (e.g., McClellan Oscillator, TTM Squeeze) are also extreme.

Key Observations:

The market showed early resilience but late-day selling was discouraging.

Positive economic data included ISM Services at 51.6 (above expected 50.2), signaling expansion.

Sentiment is shifting positive (57 on the sentiment index), potentially indicating FOMO.

The Fed’s meeting (starting May 6, announcement on May 7) is a focal point, with no expected rate changes but attention on Powell’s comments.

The bullish percent index for the S&P rose despite the down day, a positive sign, though many indicators remain extreme positive.

Outlook for May 6, 2025:

The market remains positive in the short and intermediate term but negative long-term. The pullback is seen as a natural correction after an overbought rally, with resistance at 5,700.

Key economic events include the trade balance report (minimal impact expected) and the Fed’s ongoing meeting. Geopolitical and tariff developments may drive volatility.

Seasonality for May 6 is negative for the Dow and neutral-to-negative for the S&P/NASDAQ, though post-election year patterns suggest potential positivity.

Pivot points for Tuesday are predefined and can guide intraday trading (10-minute charts most accurate).

Warning Signs:

Negative long-term growth-to-value and discretionary-to-staples ratios, negative Swenlin Trading Oscillator, and long-term special K indicator. Extreme short-term indicators and below-50 100/200-period moving average studies are concerns.

After switching to positive on Friday, the ADX short and intermediate term charts have crossed back to negative.

Positive Signs:

Positive McClellan oscillators, bullish percent indexes, parabolic SAR, and momentum indicators (e.g., Vortex, money flow). The financial sector and NASDAQ 100 momentum remain supportive.

Conclusion:

The market is in a short-term pullback within a positive short/intermediate-term trend but remains negative long-term. Investors should monitor any Fed commentary, interest rates, and geopolitical developments while watching for signs of continued resilience or a shift to a more negative trend.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/17Gjm0rtAaJskWP3aBhF4b-OYl2Up-a2l/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!