InterMarket Analysis Update for Monday December 15, 2025

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Summary of Intermarket Analysis Video Update prepared for Monday, December 15, 2025:
This weekly update examines the S&P 500 primarily through a valuation lens, while analyzing intermarket relationships across assets, sectors, and global markets to gauge overall market health and potential shifts.
Big-Picture Outlook:
The market remains positive overall, with no major changes from recent weeks.
Short-term (days to months, dating back to last summer), there is a gradual shift from growth to value, suggesting a more defensive posture.
This is not resembling the severe growth-to-value rotation seen at the end of 2021 (before the 2022 bear market).
Mega-cap/AI/growth stocks are cycling in and out of favor — strong periods followed by pullbacks (e.g., hit hard on Friday).
Cyclicals, financials, and economically sensitive areas are showing relative strength, implying the market anticipates a solid economy rather than recession.
Valuation:
The S&P 500 remains significantly overvalued by multiple metrics:
Well above historical norms on Shiller CAPE (40.22 vs. median/mean 16–17).
Forward P/E 22.1–22.5 (above expensive threshold of 20).
MegaCap-8 forward P/E 28.3.
Small caps (S&P 600) are fairly valued (15.2 P/E), mid-caps slightly richer (16.2).
Overvaluation is long-standing; not used as a timing tool, but noted as a persistent risk. The market can decline sharply and still remain overvalued.
Growth vs. Value Rotation:
Long-term: Growth continues to outperform value.
Short-term: Clear shift toward value (defensive and cyclical areas).
Value index recently hit all-time highs; growth has not.
Multiple growth/value ratios weakening, some threatening death crosses (e.g., S&P growth vs. value below 50- and 200-day MAs).
Small- and mid-cap growth/value ratios mixed; small caps have faked out multiple times recently.
Inflation:
No major concerns currently.
Fed projections 2.4–2.6%; upcoming data expected soon.
Pring inflation/deflation ratio is an outlier (still rising), but not confirmed elsewhere.
Commodities (CRB) choppy/weak; oil in downtrend ($57 range); Baltic Dry pulling back; lumber, wheat, fertilizer down.
Market-based inflation measures (TIPS, expectations) quiet.
Other Key Markets & Relationships:
Commodities/Metals: Mixed — gold and silver strong (silver outperforming gold, breaking to new highs); copper up but not at highs; oil, natural gas trends vary.
Dollar: Weakening (positive for stocks); euro strongest among majors, yen and pound weaker.
Bonds/Yields: 10-year 4.19% (up slightly); bonds underperforming stocks; junk bonds strong (risk-on signal).
Breadth & Indexes: Broad participation decent (equal-weight S&P holding up better than cap-weighted recently); advance-decline lines solid; Wilshire, NYSE Composite at/near highs.
Sectors: Financials and industrials showing recent strength (need follow-through); tech/communication services lagging relatively; defensives (staples, utilities) mixed.
Global: Most major regions (China, EM, Europe, Japan) in longer-term uptrends; U.S. leadership softening slightly.
Positive/Negative List (No Major Changes):
Positives dominate: Most indexes, sectors, risk assets, global markets, junk bonds, breadth indicators.
Negatives (short list):
U.S. dollar (daily chart), British pound & yen vs. USD, Bitcoin (in downtrend).
Near-Term Notes:
S&P slightly down in early December; second half of month historically stronger.
Thin trading expected into year-end holidays.
Watching for confirmation of growth-to-value/cyclical shift, or whether mega-cap growth regains leadership.
Overall tone: Cautiously optimistic — market healthy long-term, but monitoring short-term rotation and potential loss of momentum in key growth drivers.

PDF of Slides:
https://drive.google.com/file/d/141yDvog8jMW2rT3Sa9w-WSex6Xx70tXA/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!