S&P 500 Daily Update for Friday August 22, 2025

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Market Summary for Thursday, August 21, 2025:
Outlook for Friday, August 22, 2025
Thursday's Market Action:
Choppy Trading: The S&P 500 experienced a volatile day, ideal for day traders to capitalize on small price movements, but it trended slightly lower, closing down 0.4%.
Defensive Shift: The S&P 500 is rotating from growth to a more defensive posture, with large-cap growth underperforming and sectors such as staples and utilities showing relative strength.
Technical Indicators:
Closed slightly below the 20-period simple and exponential moving averages, signaling a short-term negative trend.
Intermediate and long-term trends remain positive, though some weakness is emerging in the intermediate term.
Volume remains below average, typical for summer months.
StochRSI shows extreme negative readings, with no strong conviction in other indicators.
Market Levels:
Opened below the daily pivot at 6,383, found support at S1 (6,357), and hit resistance at the unchanged level.
Closed around 6,370, indicating indecision and choppiness.
Economic Data:
Initial jobless claims rose to 235,000 (from 224,000), with continuing claims remaining high, suggesting longer unemployment periods.
Philadelphia Fed Index was weaker than expected at -0.3 (vs. 9 expected).
Global U.S. manufacturing PMI improved to 53.3 (above 50, indicating expansion), but the market views this as potentially inflationary.
Existing home sales exceeded expectations at 4.01 million.
Leading Economic Index (LEI) dropped 0.1%, signaling potential recession risks as it remains below the critical threshold.
Fed Comments and Market Sentiment:
Kansas City Fed President Schmidt and Cleveland Fed President Hammock expressed reluctance to cut rates soon, citing persistent inflation. This disappointed markets, contributing to a more cautious outlook.
Sentiment has shifted to neutral (down from positive), with the VIX slightly up but still below 20, indicating moderate fear returning.
The dollar showed slight strength, potentially pressuring stocks if sustained. Interest rates at 4.33% remain below the critical 4.5% level.
Sector Performance:
Mega-cap tech and growth stocks (e.g., Amazon, Tesla, Meta) underperformed, with most down less than 1%.
Defensive sectors such as energy and staples held up better, though still slightly down.
Financials and semiconductors (SMH ETF) remain above their 50-day moving averages but show signs of weakness.
Key Focus for Friday:
Jerome Powell’s Jackson Hole Speech: The markets are focused on Powell’s remarks, which could provide clarity on Fed policy. His 2022 speech triggered a sharp reversal, making investors cautious.
Potential Outcomes:
A "wait and see" stance could maintain the current lack of conviction, potentially stabilizing the markets if perceived as non-alarmist.
A hawkish tone could reinforce the defensive shift, while a dovish tone might spur a return to growth-oriented optimism.
Seasonality: August 22 historically shows neutral-to-negative seasonality in post-election years, with options expiration week ending.
Overall Outlook:
Short Term: Negative, with the market below key moving averages and lacking conviction.
Intermediate and Long Term: Still positive but showing signs of weakening.
Key Risks: Rising dollar strength, higher interest rates (if approaching 4.5%), or a hawkish Powell speech could pressure stocks further.
The S&P 500 remains in a wait-and-see mode, with Powell’s speech likely to dictate the next directional move. Investors should monitor pivot points, growth-to-value ratios, and macroeconomic indicators for further clues.

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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!