InterMarket Analysis Update for Monday December 22, 2025

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Summary of the Intermarket Analysis Video Update prepared for Dec 22, 2025:
This weekly video provides an intermarket perspective on the stock market, focusing on clues from various assets and sectors that could influence the S&P 500, which is currently less than 1% from all-time highs.
Key Themes:
Ongoing Tug-of-War: Growth vs. Value. Growth stocks (e.g., Magnificent Seven, tech, AI) have driven the bull market, but value is showing relative strength recently.
Multiple growth-to-value ratios are in downtrends or showing negative divergences (lower highs in ratios while S&P holds near highs).
This rotation is viewed as a yellow flag (caution), not yet a red flag. It echoes patterns seen before the 2022 bear market but is not predictive.
Internal breadth is mixed; some improvement late in the week, but leadership from mega-cap growth has weakened since October.
Valuation:
S&P remains significantly overvalued on traditional P/E (well above 20), Shiller CAPE (~40, near dot-com levels), and forward P/E (21.9).
Mega-caps most expensive (28.2 forward P/E); small/mid-caps more fairly valued (15–16 range).
Small caps have performed well seasonally in December but often fade afterward.
Inflation Outlook:
No major concern currently. Inflation has cooled since 2022 peak; recent data (CPI) benign, core PCE pending.
Commodities mixed: oil, natural gas, lumber, wheat declining (deflationary); aluminum, copper stronger.
Market inflation expectations low; TIPS and related ratios tame.
One long-term inflation/deflation ratio suggests inflation strength, but not confirmed elsewhere.
Other Intermarket Signals:
Bonds/Yields: 10-year yield rising modestly but not disruptive. Junk bonds outperforming investment-grade (risk-on).
Dollar: Weak, under pressure; inverse correlation with silver/gold strong.
Commodities/Metals: Gold and especially silver strong (silver at new highs). Copper (economic barometer) in uptrend.
Currencies: Euro stronger vs. dollar; yen weaker.
Global: U.S. stocks underperforming world ex-U.S. in some measures; emerging markets and Japan rolling over slightly.
Bitcoin: Showing short-term weakness (85k range), watched as proxy for Nasdaq risk appetite.
Sector & Index Review:
Stronger areas: Financials (economy-sensitive), healthcare, discretionary (relative to staples).
Weaker: Utilities, real estate, energy, communication services underperforming S&P.
Tech/semiconductors: Bumpy but longer-term uptrend intact; recent bounce encouraging.
Transports improving (better Dow Theory confirmation).
Breadth indicators mostly positive (advance-decline lines strong).
Seasonality & Near-Term:
Holiday period (thin trading, professionals away) often brings Santa Claus rally and low volume upside.
Focus shifts to early 2026 for whether growth/value rotation impacts S&P price action.
Overall Conclusion:
Positive list remains long and unchanged (broad uptrends, risk-on signals, breadth, copper, junk bonds, etc.).
Negative list short (mainly dollar weakness, Bitcoin short-term trend, some growth/value divergences).
Tone: Cautiously observant — market internals show rotation and divergences worth monitoring, but no imminent breakdown. Emphasize analysis over forecasting.

PDF of Slides:
https://drive.google.com/file/d/1oPNq_PpMKfTEPA9tKDqHSXsC7UBEhT7y/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!