InterMarket Analysis Update for Monday August 4, 2025

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Intermarket Analysis Video Update Summary (Prepared for August 4, 2025)
Overview: Despite a significant market downturn on Thursday and Friday, the overall market trends remain largely unchanged. Growth continues to outperform value, and markets remain overvalued, a trend persisting for years.
Key Points:
1. Valuation:
Markets are historically and forward-looking overvalued (e.g., Shiller PE ratio at 38, more than double the median/mean).
S&P 500 at 21.8, mega caps at 28.4, with mid and small caps more fairly priced but underperforming.
High valuations driven partly by foreign inflows, per Bloomberg.
2. Growth vs. Value:
Growth continues to outperform value, despite Friday’s pullback. Growth ETFs and indexes (e.g., S&P growth-to-value ratio) remain in uptrends.
Value fell below 50- and 200-day moving averages, showing relative weakness.
3. Inflation:
Inflation indicators (e.g., CRB index) remain in uptrends but show signs of leveling off.
Inflation expectations and TIPS (Treasury Inflation-Protected Securities) ratios are declining, suggesting reduced inflation concerns.
Commodities such as aluminum, corn, and wheat are in downtrends, while lumber and fertilizer show potential inflationary pressure. Oil is volatile due to geopolitical factors.
4. Other Markets:
Copper declined sharply due to tariff news but remains in an uptrend, serving as an economic barometer.
Gold is stable, silver outperforming gold slightly, and the U.S. dollar weakened, dropping to the 98 range.
Euro and British pound bounced back against the dollar; Japanese yen shows slight underperformance.
5. Indexes and Correlations:
S&P 500 and Nasdaq 100 pulled back but remain in uptrends. Nasdaq outperforming S&P 500.
Mega caps generated a golden cross, indicating strength, while small caps and financials underperforming.
Stocks outperforming commodities and bonds; bonds saw a flight-to-safety rally on Friday.
6. Sectors:
Tech and Industrials: Outperforming, with tech setting recent new highs despite Friday’s pullback.
Utilities: Breaking out, potentially due to AI and EV-driven electricity demand.
Financials: Concerning underperformance, dropping below key moving averages.
Energy and Real Estate: Underperforming, with energy in a downtrend.
Semiconductors: Set new highs but pulled back, still above moving averages.
7. Bonds and Yields:
Bond prices rose (yields fell) on Friday due to a flight to safety.
High-yield and corporate bonds remain strong, outperforming conservative government bonds.
Stock-to-bond ratios favor stocks, though bonds gained ground on Friday.
8. Market Indicators:
Volatility (VIX) rose above 20, indicating increased stock market uncertainty.
Dow Theory signals mixed, with transports underperforming and utilities gaining defensively.
9. Long-Term Trends:
U.S. stocks underperforming global stocks long-term but remain above key moving averages.
Momentum oscillators (e.g., Coppock Curve, KST) show stalling or declining trends for U.S. markets.
10. Positive vs. Negative:
Positive: Most markets (e.g., stocks, tech, utilities, bonds) remain in uptrends despite pullbacks.
Negative: Small caps and the U.S. dollar show weakness; financials are a concern.
Outlook: August is seasonally weaker for markets, so watch for shifts in growth-to-value dynamics and inflation trends. The market’s reaction to Friday’s downturn appears normal after a strong run, but copper’s decline and financials’ weakness warrant caution. No major trend reversals are evident yet.

PDF of Slides:
https://drive.google.com/file/d/1wKm4Lat0jLXeTk3l_c_7qJmqazabZvOd/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!