What to Watch Update for Monday July 14, 2025

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The "What to Watch" video update analyzes market trends by categorizing indicators into positive, negative, and watchlist groups to assess whether the S&P 500 will continue its upward trend or face a decline due to trade news and over-exuberant sentiment. Prepared for Monday July 14, 2025
Summary:
Positive Indicators:
Daily Chart & Trends: The S&P 500 is in a healthy uptrend with a recent golden cross and all-time highs, despite a slight Friday dip. Short- and intermediate-term trends remain positive, with prices above key moving averages.
Growth vs. Value: Growth-to-value ratios (e.g., S&P, small caps, mid-caps) are mostly positive, with growth outperforming value. Discretionary sectors are improving, and tech continues to drive the market.
Market Sentiment & Ratios: The VIX is below 20 (positive for returns), risk-on vs. risk-off and high-beta vs. low-beta ratios are rising, and the S&P-to-utilities ratio shows conviction. Semiconductors and tech outperforming staples, signaling growth strength.
Smart Money Indicators: Accumulation/distribution, Chaikin Money Flow, and other smart money metrics remain positive, though some show slight declines. Advance-decline lines and bullish percent indices are positive.
Broad Market & Sectors: The NASDAQ, NASDAQ 100, and Wilshire 5000 show golden crosses and uptrends. Semiconductors and the FANG index are strong, and stocks are outperforming bonds, suggesting a soft landing (no recession).
Negative Indicators:
Volume Concerns: Below-average volume on new highs indicates negative divergence, a potential warning sign.
Sentiment Extremes: The Fear and Greed Index at 75 suggests over-exuberance, potentially signaling a short-term pullback. Some momentum indicators (e.g., NASDAQ 100) are flat or declining.
McClellan Oscillator: The S&P McClellan Oscillator dropped below zero, and the NYSE version declined, leaning negative.
Financial Sector: The financial sector-to-S&P ratio is weakening, and regional banks, while improving, remain negative. Home construction is improving but not yet positive.
Mass Index: A recent weekly signal suggests a potential downside reversal, aligning with historical July pullbacks (2023, 2024).
Watchlist:
Trade News Impact: The market held up well despite Friday’s negative trade news, but ongoing developments could influence sentiment if perceived as substantial.
Jobless Claims: Initial claims are down, but rising continuing claims signal longer unemployment periods, a concern if they exceed 2 million.
Yields & Bonds: The 10-year yield nearing 4.5% could pressure stocks. Bond ratios (e.g., TIPS, junk vs. government bonds) show no major inflation concerns yet but are worth monitoring.
Oil & Dollar: Oil prices are rising despite increased supply, and the dollar is in a downtrend but bouncing from oversold levels.
Global Markets: The German DAX is in an uptrend, but U.S. stocks are not yet outperforming global markets significantly.
Historical Patterns: Mid-July pullbacks occurred in 2023 and 2024, raising questions about a similar 2025 scenario, though not a prediction.
Conclusion: The market remains predominantly positive, with strong trends and growth-driven indicators outweighing negatives. However, low volume, extreme sentiment, and potential trade news impacts warrant caution. Monitor charts for evidence of a pullback, particularly given historical July patterns, without making firm predictions.

PDF of Slides:
https://drive.google.com/file/d/1gJuYFtZNJmif14hNCY6JUmfSzi5GLwa1/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!