Market Surges After Trade Talks! What’s Next?

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Market Summary for Monday, May 12, 2025, and Outlook for Tuesday, May 13, 2025
Monday Recap:
Market Performance: Broad-based rally with the S&P 500 gapping higher at 5808 (R4 pivot), closing slightly below 5850, up 3.26%. Growth outperformed value, driven by short covering and FOMO (fear of missing out).
Key Drivers: Positive reaction to U.S.-China trade talk progress (90-day tariff reduction: U.S. from 145% to 30%, China from 125% to 10%). India-Pakistan ceasefire noted but minimal direct impact on U.S. markets unless there is an escalation.
Technical Indicators:
Short, intermediate, and long-term trends are positive, though long-term remains in a downtrend (50-day MA below 200-day MA).
Above 200-day MA, signaling bullish sentiment, but overbought in short term (RSI (9), Stochastic, CCI extreme).
VIX dropped to 18.39, indicating reduced fear (below 20, associated with positive returns).
Volume: Above average, reflecting participation after recent below-average trends.
Sectors: Discretionary, tech, and communication led gains; utilities lagged. Mega caps and growth stocks performed strongly.
Other Assets:
10-year yield rose to 4.46% (nearing 4.5% caution level).
Dollar bounced but remains in a downtrend.
Gold fell due to reduced uncertainty post-trade deal.
Sentiment: Improved to 66 (from 62), with earnings sentiment also rising.
Challenges and Observations:
April’s market damage is being repaired, but extreme short-term indicators suggest a potential pullback.
Trade deal is temporary (90 days), creating uncertainty if no permanent agreement is reached.
Tuesday Outlook:
Economic Data: CPI (key report) and NFIB Small Business Optimism Index due. Thursday brings initial claims, retail sales, PPI, and a Fed Chair Powell speech.
Seasonality: May 13 historically negative for Dow/S&P, neutral-to-negative for NASDAQ. Options expiration week slightly bearish.
Pivot Points: Posted on YouTube community tab for intraday support/resistance levels.
Indicators: Mixed smart money signals (positive Accumulation Distribution and Chaiken Oscillator, negative Chaiken Money Flow). Momentum and bullish percent indexes remain positive, but overbought conditions could limit upside.
Conclusion: Markets are positive across short, intermediate, and long-term horizons, but overbought in the short term and still in a long-term downtrend. Monitor CPI and trade talk developments for potential volatility.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/1EX19Wevv8HXizyBYzSiN0I2VQPu7Sx2G/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