Deep Dive Update for Monday August 11, 2025

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Deep Dive Video Update for Monday, August 11th
The weekly deep dive video analyzes various charts to identify market trends and potential signals, focusing on indicators like the VIX, S&P, and other ratios. Here's a concise summary of the key points:
1. VIX (Volatility Index):
Long-term VIX remains below 20, indicating a positive outlook for stocks.
Short-term RSI (9-period) shows a neutral reading after a recent spike above 20, suggesting market stabilization.
SKU index (measuring out-of-the-money options) has returned to neutral, hinting at reduced expectations of a big market move.
2. VIX and S&P Correlation:
The correlation is low, and the VIX-to-VIX volatility ratio is declining, which is positive for stocks in the current context.
The Ulcer Index (fear measure) remains below its moving average, indicating lower market fear.
3. Stock vs. Bond Volatility:
The ratio of stock to bond volatility is slightly increasing but remains favorable for stocks, as stock volatility has been decreasing faster than bond volatility.
4. Large Cap vs. Small Cap Ratio:
Large caps have outperformed small caps since early 2025, with the ratio moving sideways since April.
5. Market Performance:
Percentage gains since significant lows in 2022, 2023, and April 2025 are tracked for context.
The S&P is below the 10% threshold above its 200-day moving average, reducing correction concerns.
6. Anchored Moving Averages:
The S&P 500 remains above key anchored moving averages, with potential support levels identified if a decline occurs.
A possible bear flag pattern is noted, but higher highs and lows suggest continued strength.
7. Advance-Decline Metrics:
The S&P cumulative advance-decline line is near an all-time high but shows slight negative divergence based on price and volume.
Short-term (19-day) advance-decline ratio is positive, but longer-term (10-day highs/lows) shows negative divergence, hinting at potential developing weakness.
8. Sector and Index Performance:
Large cap growth is strong but hasn’t surpassed recent highs, with mega caps such as Apple driving gains.
Momentum stocks are leveling out after improving through July and August.
US stocks underperforming international stocks, with Europe holding up better in 2025.
Regional banks and financials underperforming the S&P 500, raising mild concerns.
9. Technical Indicators:
Short- and intermediate-term rainbow moving averages (10-100 periods) confirm a positive trend.
Connor’s RSI is neutral after a prior extreme negative reading.
No significant signals from Mass Index, Standard Deviation, CMB Composite, %B, or Pring Bottom Fisher indicators.
10. Bonds and Yields:
No strong market concern about inflation or interest rates, as shown by TIPS and bond ratios.
The 10-year to 3-month yield curve fluctuates between normal and inverted, with no clear recession signal.
Long-term bonds (TLT) moving inversely to the S&P and QQQs in the short term.
11. Other Ratios and Markets:
Growth outperforming value (QQQs vs. Dow), but financials and transports lagging.
Gold vs. S&P ratio remains below a declining trend line.
Retail is in an uptrend, but discretionary-to-staples ratios show mixed performance.
Semiconductors and homebuilders show resilience, while transports and regional banks weaken.
12. Global and Macro:
The German DAX underperforms the S&P, with a positive correlation.
The US dollar index faces resistance, and a weaker dollar is market-friendly.
European stocks outperform US bonds.
13. Positive Scenarios:
Long-term oscillator (stocks above 200-day moving average) is positive but declining slightly.
SPY-to-Staples ratio has recovered from earlier concerns, indicating short-term strength.
Key Takeaways:
The S&P 500 is showing short-term strength, particularly seen in the NASDAQ and large cap growth, but negative divergences in advance-decline metrics and underperformance in financials and small caps suggest caution. No immediate correction is signaled, but support levels (e.g., anchored moving averages) are identified for potential declines. Inflation and interest rate concerns remain low, and the market leans positive, with key sectors like retail and homebuilders showing resilience.

PDF of Slides:
https://drive.google.com/file/d/1ykH5uM5zDjkSnHuVsTpnK97svhceAG78/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!