S&P 500 Daily Update for Tuesday August 5, 2025

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Market Update Summary for Monday, August 4, 2025:
Outlook for Tuesday August 5, 2025:
Market Performance:
The S&P 500 rebounded on Monday, recovering some of Friday's losses, with a 1.47% gain, though it didn't fully offset Friday’s decline.
The market regained the 20-period moving average, turning the short-term trend positive across short, intermediate, and long-term time frames.
The session opened with a gap higher, driven by strong futures and positive European markets, surpassing resistance levels R1 (6279) and R2 (6321).
No significant midday selling occurred, and short covering contributed to the close near the intraday high.
Technical Analysis:
Volume was below average, indicating a negative divergence compared to last week’s above-average volume during declines, a potential warning sign.
The parabolic SAR remains negative, and several momentum oscillators (e.g., PMO) show extreme positive readings but with negative divergences.
The VIX dropped to 17.52, back within its recent range, suggesting reduced volatility, though a seasonal tendency for higher VIX looms.
Growth outperformed value, with small and mid-caps regaining some ground. Tech and communication sectors led, while energy was the only sector down, impacted by OPEC’s decision to increase output by 547,000 barrels/day in September.
Economic and Sentiment Context:
Interest rates continue to decline (10-year yield at 4.2%), possibly reflecting a weaker economy rather than a flight to safety, with expectations of a Fed rate cut in September.
No major trade deal or geopolitical news directly impacted the market, but an adjusted trade deadline on August 7th is approaching.
Factory orders fell 4.8% month-over-month (less than the expected 5.1% drop), with mixed results when excluding transportation.
Sentiment improved to positive (57 from 50), and trend indicators (e.g., green line above red line) turned bullish, though the trend is weakening (ADX below moving average).
Warning Signs and Positive Indicators:
Warnings: Negative divergences in momentum oscillators, below-average volume, negative parabolic SAR, and declining bullish percent index context. Financials underperforming the S&P and insider buying drying up are concerns.
Positives: Growth-to-value ratios remain strong, vortex indicator is positive, and money flow is above 50. The market recaptured key moving averages and filled a gap from Friday.
Looking Ahead to Tuesday, August 5:
Key reports include ISM Services and trade balance, with potential geopolitical or trade-related developments.
Seasonally, August 5th is neutral to positive, but post-election years historically show weakness in August, with a tendency to peak around this time.
The S&P 500 faces a question: Is this bounce the start of a move higher, or a trap before further declines? Negative divergences suggest caution, but the market’s ability to overcome them remains possible.
Conclusion:
The S&P 500 is positive across all time frames but shows signs of a weakening trend. Investors should monitor upcoming economic data, trade developments, and technical indicators to determine if the rebound continues or if weakness resumes.

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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!