Deep Dive Update for Monday October 27, 2025

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In the Deep Dive Video Update, prepared for Monday, October 27th, various market indicators are discussed, focusing primarily on chart analysis to gauge market trends, as opposed to relying solely on news or media.
Here’s a summary of the key points:
Chart Analysis Philosophy: Charts provide a clearer picture of market dynamics than news or media speculation. By analyzing short, intermediate, and long-term chart trends, one can better understand market movements, despite occasional overreactions.
VIX and Volatility: The VIX (Volatility Index) is a key focus, with recent levels dropping below 20, indicating reduced market fear. VIX momentum uses indicators including the MACD and RSI, noting that extreme readings (above 70 or below 30) signal potential market shifts. A spike in other VIX studies preceded a market decline on October 10, but current levels suggest stabilization.
Volatility Ratios: Ratios including the VIX to VVIX (volatility of VIX) and stock volatility (VIX) to bond volatility (MOVE index) are analyzed. These ratios have shown shifts, with stock volatility rising relative to bonds, suggesting potential pressure on stocks, though not yet critical.
Market Performance: The S&P 500 has risen 94.35% since October 2022, 65.5% since October 2023, and 40.47% since April 2025 lows. The S&P 500 hit all-time highs on Friday, but it is best to watch for potential declines (2-5% normal, 5-10% concerning, more than 10% significant).
Advance-Decline Ratios: These show positive trends, with price-based ratios outperforming volume-based ones recently, hinting at potential weakness. The NYSE advance-decline line is near all-time highs but not fully aligned with S&P gains, suggesting caution.
Sector and Index Analysis:
Large vs. Small Caps: Small caps (Russell 2000) are improving as interest rates fall (10-year yield at 4%), but lack strong continuous conviction.
NASDAQ and Tech: The NASDAQ Composite (90.4 technical score) and NASDAQ 100 (88.5) lead, driven by AI stocks, though speculative risks reminiscent of the dot-com bubble should be watched.
Dow and Mid-Caps: The Dow (66.1) and mid-caps (51.4) lag, with mid-caps barely positive.
Sectors: Semiconductors and home builders are stronger, while transports and retail are lagging. Regional banks show recovery after recent weakness tied to earnings and loan fraud news.
Other Indicators:
Value Line Geometric Index: Shows a long-term negative divergence, not reaching 2024 highs despite S&P gains, signaling potential underlying weakness.
Interest Rates and Bonds: Declining rates are market-friendly, but this should be questioned if this reflects economic weakness, safety-seeking behavior, or merely economic tweaking.
Inflation and Gold: Inflation concerns are low (CPI stable), but gold’s rise may reflect global "insanity" rather than inflation.
Global Markets: The German DAX is underperforming U.S. stocks, and emerging markets remain range-bound.
Retail and Discretionary: Retail underperforming the S&P, and discretionary-to-staples ratios show mixed signals, with recent weakness in discretionary stocks such as Tesla and Amazon.
Its importance should be stressed of monitoring these indicators for early signs of market shifts, particularly as short-term gains may mask longer-term concerns.

PDF of Slides:
https://drive.google.com/file/d/1a1byyYaaLhIhwYaoWhDndVb0uONCqKr7/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!