Daily Update for Monday August 11, 2025

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

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

Link to Video-Only Immediate Access:
https://spxvideos.substack.com/

Market Summary for Friday, August 8, 2025:
Outlook for Monday, August 11, 2025:
Market Performance:
S&P 500: Closed up 0.78%, just shy of a new all-time high (less than 1% from the record). Held above R1 pivot at 6383, showing resilience after a higher open. However, volume was below average, indicating a negative divergence and potential upside exhaustion.
NASDAQ & NASDAQ 100: Both set new all-time highs, driven by mega-cap strength, particularly Apple.
Mega Caps: Strong performance from Apple, Google, Meta, Tesla, NVIDIA, and the Dow Jones Semiconductor Index. Amazon slightly down, Netflix struggling to reclaim its 50-day moving average.
Other Indices: Dow rose above 44,000, up 0.5%. Russell 2000 (small caps) up 0.22%, S&P 600 up 0.25%, Wilshire 5000 up 0.67%, and financial sector up 0.93% but underperforming S&P on a ratio basis.
Sectors: Tech led gains, while utilities and real estate (defensive sectors) were down. Discretionary outperformed staples slightly.
Technical Analysis:
Positive Trends: The S&P 500 is positive across short, intermediate, and long-term timeframes, above all moving averages. Short-term indicators including Williams %R and stochastics show positive momentum, getting extreme.
Negative Divergences: Declining volume on S&P gains, NASDAQ 100 bullish percent index falling despite new highs, and advance-decline oscillator below zero. High-beta/low-beta ratio underperforming, and financials lagging S&P.
Volatility: VIX declined, below moving averages, but seasonality suggests potential spikes in August-October. Equity put/call ratio improved, indicating cautious optimism.
Other Indicators: McClellan oscillators and summation indexes remain negative. Parabolic SAR and momentum oscillators (e.g., PMO) are negative, but some indicators such as the Swenlin Trading Oscillator are positive.
Economic and Geopolitical Context:
No Economic Reports: None released on Friday, but upcoming week includes CPI (Tuesday), PPI (Thursday), retail sales, industrial production, and consumer sentiment (Friday), which could influence Fed expectations.
Geopolitical/Trade: Gold rose after fears of a 39% tariff were eased by a White House clarification. U.S.-Russia talks aim to negotiate peace in Ukraine, with a Trump-Putin summit planned. Potential tariffs and trade war concerns persist.
Fed Outlook: St. Louis Fed President Musalem suggested inflation may stay elevated due to tariffs but remained open to rate cuts, which the markets took as positive. Interest rates ticked up (10-year yield at 4.29% from 4.25%), but stocks were unfazed.
Sentiment: Improved to 59 (positive) from 55 (neutral border). Market bias is positive, but momentum is mixed due to divergences.
Valuation and Recession Risks:
Valuation: S&P trailing P/E at 24.84 (above average), forward P/E at 22.9, indicating overvaluation.
Recession Probability: S&P pricing suggests an 8% chance of recession, while small caps and 5-year yields indicate higher risks (up to 60%). Leading Economic Index (LEI) suggests no imminent recession.
Earnings Season: Stocks missing earnings and guidance dropped 7.4% on average, but positive outlooks held up well. Fewer companies (16 vs. 124 in Q1) mentioned recession in earnings calls.
Monday Outlook:
Economic Calendar: No major reports on Monday, but geopolitical developments (e.g., U.S.-Russia talks, trade/tariff news) could move the markets.
Seasonality: August 11 is historically negative for the Dow, neutral to negative for S&P and NASDAQ. Post-election years typically show weak August performance, but this hasn’t materialized yet.
Options Expiration Week: Market up 52% of the time, slightly positive bias.
Key Levels: S&P faces longer-term resistance at R1 pivot (6468). Support held above R1 on Friday. Watch for broad market moves to resolve negative divergences or confirm upside momentum.
Conclusion:
The S&P 500 showed strength on Friday, led by mega caps, with the NASDAQ and NASDAQ 100 hitting new highs. However, negative divergences (e.g., low volume, declining bullish percent index) suggest caution. The outlook remains positive across all timeframes, but conviction is lacking. Monday’s session may hinge on geopolitical or trade news, with a heavy economic calendar later in the week potentially shaping Fed policy expectations.

PDF of Slides:
https://drive.google.com/file/d/18ha2R9LorzI1_ME3JMNhZYD7_hF2VBRJ/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!