InterMarket Analysis Update for Monday June 23, 2025

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InterMarket Analysis Update
Prepared for June 23, 2025

This analysis explores trends beyond the S&P 500, covering valuation, growth vs. value, inflation, commodities, sectors, indexes, correlations, and long-term trends.

Valuation

The S&P 500’s PE ratio (21.2) remains high, above the “expensive” threshold (20), with Robert Schiller’s 10-year average PE at 36.35 (double the 16-17 median). Mid-caps (15.5) and small-caps (14.7) are closer to fair value. Overvaluation persists but isn’t a reliable timing tool, as markets have sustained high PEs since 1990. A drop to 4,200 would align with “just expensive” from the current 5,900 level.

Growth vs. Value

Growth stocks are outperforming, with a recent golden cross and strength across ETFs and indexes (S&P, small-caps, mid-caps). Value is in a downtrend but showing signs of recovery, suggesting potential rotation if the market turn more defensive.

Inflation and Commodities

The CRB index is rising, driven partly by geopolitics, with inflation expectations creeping up. The Baltic Dry Index spiked but is pulling back, and the TIPS-to-Treasury ratio is down, favoring TIPS. Oil is above $74 (up from the high 50s), while gold holds high but lacks strong momentum. Aluminum and wheat are in downtrends, corn is pulling back from an uptrend, and copper and lumber show loose uptrends, with copper signaling economic strength. The copper-to-gold ratio is sideways, decoupled from 10-year yields since COVID.

Currencies

The U.S. dollar is in a downtrend (below 98), while the euro, yen, and pound are rising. The gold-to-silver ratio is declining, with silver outperforming gold recently.

S&P 500 Sectors

Strong: Communication (uptrend, above moving averages), financials (ratio to SPX bouncing off 200-day MA), industrials (golden cross), tech (nearing golden cross), energy (rising with oil).

Weak: Real estate (downtrend), staples (sideways, lagging the SPX), healthcare (downtrend, sideways), discretionary (downtrend, drifting lower).

Utilities: Uptrend but retreating.

Semiconductors: Improving, nearing a golden cross.

Indexes and ETFs

The S&P 500 outperforming its equal-weight version, driven by mega-caps (e.g., Microsoft, NVIDIA). The NASDAQ 100 outperforming the S&P but is pulling back, with broader NASDAQ participation. Small and mid-caps are in downtrends, while ARK ETF (+8% last week), FANG index, emerging markets, and Bitcoin show uptrends. The Nikkei is sideways.

Bonds and Yields

Total bond, high-yield, junk, and world bond ETFs are in uptrends (price-based), but corporate and investment-grade bonds are weaker. The 10-year Treasury yield (above 4%) is in a higher range historically, with U.S. and international yields slightly declining. Stock-to-bond ratios favor stocks, especially tech.

Correlations and Ratios

Stocks and oil are moving oppositely, with oil rising and stocks sideways. Tech tends to move inversely to the 10-year yield. Stocks are underperforming commodities since early 2025. Dow Theory shows the Dow struggling at its 200-day MA, with transports and utilities sideways.

Long-Term Trends

Positive: NYSE, S&P 500, and Wilshire 5000 remain above moving averages, though momentum (e.g., PPO oscillator) is declining.

Negative: Equal-weight S&P and QQQs didn’t set new highs in February 2025, unlike weighted counterparts, signaling limited breadth.

Key Takeaways

Mega-cap growth stocks drive the market, with limited broad participation.

Geopolitical factors boost oil and inflation expectations, impacting energy and commodities.

Growth outperforming value, with tech, financials, and industrials strong, while real estate, staples, and discretionary are lagging.

Bonds and stocks show improving trends, but small/mid-caps and value remain weak.

The dollar’s downtrend supports other currencies and gold/silver.

PDF of Slides: https://drive.google.com/file/d/1g2LJkXetBxHyT2Yx8fOW3GHDuXZ0mrRw/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!