Sharp Decline Amid Rising Yields and Debt Concerns. Can the S&P 500 Bounce Back?

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

Link to The Daily Pivot Newsletter: https://thedailypivotnewsletter.substack.com/

Join to get access to perks:
https://www.youtube.com/channel/UCxlaGAKm2ApEs13O1gWDltg/join

Market Summary for Wednesday, May 21, 2025:
Market Performance: The SPX opened lower, dropping below the S1 support level at 5,915, briefly finding support at 5,900 before declining further. It eventually hit S3 at 5,847, closing slightly above the low, down 1.61% for the day, a significant move compared to recent sessions. Volume remained below average.
Key Influences:
Moody’s Downgrade: A downgrade from Moody’s last previous Friday led to a 1% drop at Monday’s open, followed by heavy buying from retail investors (“dumb money”), pushing prices up temporarily.
Interest Rates: The 10-year Treasury yield rose above 4.5% (closing at 4.6%), causing market nervousness. The 30-year yield exceeded 5%, adding to negative sentiment.
Bond Auction: A poorly received 20-year bond auction contributed to the downturn.
UK CPI Data: Hotter-than-expected UK Consumer Price Index data added to the negative backdrop.
US Debt Concerns: Worries about rising US debt and debates over the “Big, Beautiful Bill” increased market uncertainty.
Technical Indicators:
The market was overbought after climbing from the April lows, but negative divergences in charts signaled potential weakness.
The VIX rose above 20 (to 20.87), indicating increased volatility and fear.
The parabolic SAR turned negative, with the dot moving above the price, signaling a bearish shift.
Momentum indicators (e.g., stochastics, PMO, TTM Squeeze) showed declining momentum, with some turning negative.
The S&P and NYSE McClellan Oscillators dropped below zero, reinforcing bearish signals.
Sector and Asset Performance:
All sectors declined, with real estate and healthcare hit hardest. Communication held up best.
The Dow fell below its 200-day moving average, small caps dropped 2.83%, and mid-caps also weakened.
Gold rose amid a falling dollar (below 100) and debt concerns. Oil stayed low in Low 60s.
Sentiment: Sentiment dropped from 71 to 66, reflecting a shift from overconfidence to caution. Retail investors who bought the dip on Monday are likely facing losses, potentially shaking out “weaker hands.”
Smart Money Indicators: Mixed signals, with accumulation distribution debated as positive or negative based on the personal approach, while the Chaiken Money Flow remained positive but the Chaiken Oscillator has turned negative.
Outlook for Thursday, May 22, 2025:
Key Events:
Economic Reports: Jobless claims (most significant), existing home sales, and global/US manufacturing and services PMIs will influence the market.
Geopolitical Risks: Potential escalation involving Russia-Ukraine or Israel-Iran could impact sentiment.
Market Outlook: Despite Wednesday’s decline, the market remains positive in the short, intermediate, and long term, as it stays above the 20, 50, and 200-day moving averages. However, it’s declining from overbought conditions, and further weakness could emerge if negative trends persist.
Seasonality: Neutral to positive for May 22, with a historical tendency for gains in the week after options expiration (up two-thirds of the time since 1980).
Pivot Points: Wide pivot range due to Wednesday’s volatility, posted on the YouTube community tab.
Conclusion: The market is showing short-term weakness but remains in an uptrend. Investors should watch for a potential bounce or further declines, with key levels such as the 5,750 gap from the April trade deal announcement as a possible initial target.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1rRHhKI6fAPegpV4NZjAoBb4mCxOOGwF6/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!