What’s Next for Stocks After a Big Climb?

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Weekly Combo Podcast Summary (May 12–16, 2025)
Weekly Update:
Market Surge: Markets rose sharply due to a U.S.-China trade deal slashing tariffs (U.S.: 145% to 30%, China: 125% to 10% for 90 days). S&P 500 up 5.27%, NASDAQ up 7.2%, Dow up 3.4% (despite UnitedHealthcare’s 23.3% drop), small caps up 4.5%.
Year-to-Date: S&P 500 and Dow now positive, with S&P 500 23.2% above April 7 low, 3.2% from all-time high.
Sector Performance: Tech, discretionary, and communication led; healthcare lagged.
Technical Outlook: Major indexes above 200-day moving averages. S&P 500 short-term overbought, sentiment at 71 (nearing extreme at 75), VIX below 20 (bullish). Long-term trends strengthening.
Economic Context: 10-year Treasury yield at 4.44%, inflation steady, mixed economic data (retail sales, jobless claims). Fed likely to hold rates on June 18 (92% probability). Trade optimism, short covering, and FOMO drove rally. Mega caps (Nvidia +16%, Apple +6.4%) led. Moody’s U.S. debt downgrade post-Friday may impact Monday’s open.
Looking Ahead (May 19–23):
Economic Calendar: Light, with jobless claims on Thursday as key. Markets overextended, hinting at pullback risk, but momentum persists. Support levels critical. May historically bullish in post-election years.
Intermarket Analysis Update:
VIX: Nearing 20, rolling over, signaling positive outlook. Declining VIX ratios and lower fear (ulcer index).
Bonds: 10-year yield at 4.44% raises concerns; stocks stable unless yield exceeds 4.5%. Rising TIPS to 7-10 year bonds hint at inflation worries.
Market Dynamics: Large caps outperform small caps, growth leads value, U.S. stocks outpace Europe, Canada at all-time high.
Technical Rankings:
Qs: 81.8, NASDAQ: 76.6, S&P: 65.2, mid caps: 41.6, small caps: 12.9 (improving but weak).
Deep Dive Update:
VIX: Below 20, aligns with rising S&P 500. Declining VIX ratios, neutral SKU index are positive.
S&P 500: 70.5% above October 2022 low, 23% from April 7 low. Growth outpacing value, large caps leading.
Yield Curve: 10-to-2-year and 10-to-3-month not inverted but monitored daily.
What to Watch Update:
Positives: Sentiment near exuberance, growth stocks leading, bullish technicals (ADX, MACD, RSI), strong breadth (advance-decline lines at highs).
Concerns: Overbought RSI, low volume on options expiration, negative divergences (McClellan Oscillator), low consumer sentiment, weakening long-term momentum (Special K oscillator, Zahorchak method).
Key Monitors: Jobless claims (recession risk), 10-year yield above 4.5% (stock pressure), yield curves/TIPS (recession/inflation signals), gold/oil/dollar trends, U.S./DAX ratio.
Conclusion:
Markets in a strong uptrend with broad gains, but overbought conditions and negative divergences suggest caution. Monitor jobless claims, yields, and global dynamics for pullback risks versus continued gains.

DISCLAIMER This video podcast 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!