The Safe Investing Blog

Stock Market Outlook entering the Week of March 2nd = Downtrend

• ADX Directional Indicators: Downtrend
• Institutional Activity (Price & Volume): Downtrend
• On Balance Volume Indicator: Mixed

ANALYSIS
The stock market outlook changed to a downtrend last week after encountering heavy selling pressure, though Friday’s strong move could signal the start of a new rally.

The S&P500 ( $SPX ) fell 1.0% last week.  The index is ~1% below the 50-day moving average and ~4% above the 200-day moving average.

SPX Price & Volume Chart for Mar 02 2025

The ADX remained bearish last week.  Institutional activity moved to a downtrend, slipping below the 50-day moving average with a high level of institutional selling, since the index retreated to the 50-day.  Friday’s intra-day rally off the low was impressive, marking the start of the next rally attempt.  Starting Wednesday, look for a follow-through day to provide confirmation.  On-balance volume also reflected the increase in selling during the week and shifted to mixed as it tests a long term average.

S&P Sector Performance for Week 09 of 2025

Financials ( $XLE ) were the best sector last week, and Technology ( $XLK ) led to the downside.  Bias also shifted around, with Industrials reversing to neutral after 1 week, and Materials ( $XLB ) moving to bullish.  Technology ( $XLK ) and index itself moved to bearish.

Sector Style Performance for Week 09 of 2025

Given the volatility last week, perhaps it’s no surprise that Low Beta ( $SPLV ) led to the upside and High Beta ( $SPHB ) to the downside. Mega-cap growth ( $OEF ) moved down to neutral bias, reflecting the weakness shown within large tech stocks, while Defensive’s ( $POWA ) moved up to neutral.

Asset Class Performance for Week 09 2025

U.S. Bonds outperformed again last week as rates declined.  Bitcoin ( $IBIT ) led to the downside.  U.S. equities and oil continued weakening, shifting from neutral bias to bearish bias.

COMMENTARY
A choppy week for some equity sectors and risk assets.  Volatility, as measured by the volatility index ( $VIX ), broke into the 20s, after spending most of the month near 15.  As a general rule of thumb, <20 = calm, 20-30 = choppy, >30 = crash (h/t Hedgeye).

Heading into Friday’s session, most short-term technical indicators showed oversold conditions, so the strong rally into the close wasn’t TOO unexpected.  Look to see if we get follow through buying pressure later this week.

Of particular interest will be areas that held up well during recent market weakness (i.e. Consumer Staples, Financials, Healthcare, and Real Estate); do they continue to see inflows, or are they sold off for higher-beta names (i.e. Mag 7).

Nvidia ( $NVDA ) reported higher than expected sales and earnings for Q4. While that was higher than expectations, it was also the smallest beat in the past 2 years and reflects slowing growth, which is one reason the stock sold off.

January Durable Goods orders rose 3.1% month-over-month and 6.9% y/y, well above expectations and the highest level in 6 months. The second estimate of 4th quarter U.S. GDP remained steady at 2.3%.  On the inflation front, January headline PCE inflation data fell slightly, while core improved 30 basis points from upwardly revised December data:

We’ll get revised ISM PMI data this week, along with February non-farm payrolls.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of February 23rd = Uptrend

• ADX Directional Indicators: Downtrend
• Institutional Activity (Price & Volume): Mixed
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, although Friday’s sell-off damaged bullish sentiment.

The S&P500 ( $SPX ) fell 1.7% last week.  The index is at the 50-day moving average and ~6% above the 200-day moving average.

SPX Price & Volume Chart for Feb 23 2025

The ADX filled back to a downtrend during Friday’s sell-off.  Institutional activity moved to mixed, since the index retreated to the 50-day.  Distribution days are elevated, but not in the danger zone…yet.

S&P Sector Performance for Week 08 of 2025

The Energy sector ( $XLE ) provided shelter from the selloff, leading all sectors higher last week while upshifting to a bullish bias.  Consumer Discretionary ( $XLY ) was the worst performer and moved from neutral to bearish bias along with Industrials.  Materials ( $XLB ) and Technology ( $XLK ) moved back to neutral bias.

Sector Style Performance for Week 08 of 2025

High Dividend ( $MTUM ) was the best performer last week; Small Cap Growth ( $IWO ) was the worst.

Quality ( $QUAL ) moved back to neutral bias, High Dividend ( $SPHD ) moved to bullish bias, and High Beta ( $SPHB ), Large Cap Growth ( $IWF ), Mid Cap Value ( $IJJ ), and Defensive ( $POWA ) moved to bearish.

Asset Class Performance for Week 08 2025

U.S. Bonds outperformed last week, indicating a flight to safety for some investors.  The increase pushed bonds back to a bullish bias. On the downside, U.S. equities, Oil, and Bitcoin ( $IBIT ) all fought for last place, with equities and oil falling to bearish and neutral bias, respectively.

COMMENTARY
You probably noticed that our bias indicator is swinging back and forth between bullish and bearish, much like the ADX.  Whipsaws are a feature of all signal-based processes, not a bug.  Shorter timeframes tend to flip more often than longer timeframes, but it can lower your level of confidence regardless.  That’s why it’s important to confirm any signal with some other “test”, rather than trying to guess when prices will bottom or top.

Typically, a shift in bias indicates a change portfolio allocations and risk management strategies used by institutional investors ( i.e. the big money ).  They can adjust many aspects of their holdings, including exposure to asset classes, sectors, styles, and/or strategies.

Right now, a change in capital flows isn’t surprising, given the new political agenda within the United States.  Some actions create higher uncertainty ( risk ), others re-prioritize investment theses ( e.g. green energy ).

Don’t underestimate the impact of corporate capital expenditures, particularly in the Ai-related areas.  Many companies are wrestling with the implications of innovations like DeepSeek Ai, which could ripple through the semiconductor value chain.

Speaking of semiconductors, all eyes are on Nvidia ( $NVDA ) earnings this week, to be released Wednesday after market close.  We also get Durable Goods orders and the 2nd Q4 GDP estimate on Thursday, as well as the latest PCE inflation data on Friday.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of February 16th = Uptrend

• ADX Directional Indicators: Uptrend
• Institutional Activity (Price & Volume): Uptrend
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, with the S&P500 on the verge of breaking out to new highs.

The S&P500 ( $SPX ) rose 1.5% last week.  The index is ~2% above the 50-day moving average and ~8% above the 200-day moving average.

SPX Price & Volume Chart for Feb 16 2025

The ADX continues working overtime, just like last week, flipping from bullish to bearish, then back to bullish again.  Talk about whiplash…and another reason to use more than 1 signal.  With an overall reading below 10, the ADX isn’t providing much “signal” anyway.  Institutional activity remains in an uptrend, as does On-Balance Volume.

S&P Sector Performance for Week 07 of 2025

Technology staged a big rebound last week, leading all sectors higher.  Healthcare, after showing a few weeks of relative strength, took a break and was the worst performer.  Several sectors flipped back to bullish bias:

• Consumer Staples ( $XLP )
• Technology ( $XLK )
• Materials ( $XLB )
• Real Estate ( $XLRE )
• Utilities ( $XLU )

Energy ( $XLE ) improved to neutral, despite Oil’s somewhat sluggish performance recently.

Sector Style Performance for Week 07 of 2025

The Momentum ( $MTUM ) style outperformed again last week, while Defensive names ( $POWA ) lagged.  Several styles flipped back to bullish bias:

• High Beta ( $SPHB )
• Low Beta ( $SPLV )
• Large Cap Value ( $IWX )
• Quality ( $QUAL )

High Dividend ( $SPHD ) improved from bearish to neutral.

Asset Class Performance for Week 07 2025

After a couple rough weeks, Bitcoin ( $IBIT ) edged out U.S. equities as the best performer last week.  It still needs a bit more improvement to get back to a bullish bias.  The U.S. Dollar was the worst performer, and moved from bullish to bearish bias for the first time since October (could be a good thing for international equities and other negatively correlated assets).

COMMENTARY
The consumer price index (CPI) rose for the 4th consecutive month, getting back to 3%.  Core CPI increased as well, but has remained relatively flat since June 2024.

Producer prices (PPI) were flat in January, thanks to a 20 basis point increase (+0.2%) in December’s reading.  PPI has mirrored CPI, in that both have risen steadily since September.  Core PPI fell 10 basis points (-0.10%), but again, that’s only because December’s reading also increased by 20 basis points.

Finally, January retail sales fell 0.9% versus December, much worse than the forecast for -0.1%.  Sales were also down versus last January.

No major tariff or trade rumors heading into the weekend, but U.S. markets are closed Monday for President’s Day.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of February 9th = Uptrend

• ADX Directional Indicators: Mixed
• Institutional Activity (Price & Volume): Uptrend
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, although recent market moves have been “choppy” at best.

The S&P500 ( $SPX ) fell 0.2% last week.  The index is ~0.4% above the 50-day moving average and ~7% above the 200-day moving average.

SPX Price & Volume Chart for Feb 09 2025

The ADX worked some overtime last week, flipping from bullish to bearish, then back to bullish, and heads into the week on the verge of shifting to bearish again. Several distribution days come off the count during the week, so institutional activity moves back to an uptrend (from mixed) with the 50-day moving average close at hand.  No change in On-Balance Volume.

S&P Sector Performance for Week 06 of 2025

Real Estate ( $XLRE ) led sector performance last week, and moved from bearish to neutral bias.  Consumer Discretionary ( $XLY ) was the worst sector, and also fell to neutral trend.  Since the prior shift, which was ~175 days ago, $XLY is up 26%.  The trend is your friend indeed.  Industrials ( $XLI ) moved back to a neutral bias.

Sector Style Performance for Week 06 of 2025

Despite the back and forth nature seen in other areas, the Momentum ( $MTUM ) style outperformed last week.  Mid-Cap Growth ( $IJH ) lagged and moved from neutral to bearish bias.  Mid-Cap Value ( $IJJ ) and Quality ( $QUAL ) styles fell back to neutral.

Asset Class Performance for Week 06 2025

Bitcoin ( $IBIT ) was the worst performer again last week, sinking more than 5% and dropping to a bearish bias. Gold ( $GLD ) was the best performer, and has been over the past 4 weeks as well.  Oil ( $USO ) shifted from Bullish to Neutral

COMMENTARY
ISM Manufacturing data rose in January, getting back into expansion territory (>50) for the first time since September 2022!  ISM Services weakened slightly, but also remains expansionary.

On the labor front, JOLTs data showed fewer job openings in December, and January NFP data was down significantly versus December, but higher than last year at this time.

Rumors of retaliatory tariffs spooked the market late last week, and sellers took control just as they had during the prior 2 Friday sessions (24th and 31st of January).  Protect your capital, keep your losses small, and deploy capital when probabilities are in your favor (oversold in bullish trends, like the Healthcare sector was on Friday).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of February 2nd = Uptrend

• ADX Directional Indicators: Uptrend
• Institutional Activity (Price & Volume): Mixed
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, despite potentially bearish developments last week.

The S&P500 ( $SPX ) fell 1% last week.  The index is ~1% above the 50-day moving average and ~7% above the 200-day moving average.

SPX Price & Volume Chart for Feb 02 2025

The ADX flip flopped early last week thanks to high volatility.  Institutional activity racked up another 2 days of high volume selling, taking the total to 7 and moving the signal to mixed.  2 days are set to leave the count early this week (potential positive), but the 50-day moving average is close at hand (potential negative).

S&P Sector Performance for Week 05 of 2025

Communications ( $XLC ) led the way for a second week, while it was a tough week for Energy ( $XLE ) and Technology  ( $XLK ) sectors.  Energy fell back to a Bearish bias, along with Technology.  Utilities downshifted to Neutral.  Energy remains oversold, and Communications remains overbought.

Sector Style Performance for Week 05 of 2025

Low Beta equities were the best sector style last week, and upshifted to a neutral bias; Momentum stocks were the worst.  A few more bias changes to note:  High Beta, Mid Cap Growth, and Defensive downshifted to Neutral, while Small Cap Growth moved to bearish.

Asset Class Performance for Week 05 2025

Bitcoin ( $IBIT ) was the worst performer last week, while Gold ( $GLD ) and the U.S. Dollar outperformed.  Bonds shifted to a neutral bias.

COMMENTARY
Last week was quite a year. FOMC kept rates unchanged, pausing the rate-cutting cycle they started in September.  They cited rationale including: solid economic activity, stabilized unemployment, and “somewhat elevated” inflation.

The advanced (1st) GDP estimate for 2024 Q4 came in lower than expected (2.3% vs 2.6% expected), which is down almost a full percent from 2023 Q4.  Not recession territory, but still slowing growth.

PCE was up 20 basis points year over year; core was flat and hasn’t changed since October.

Most impactful to Monday’s open are President Trump’s tariffs on Mexico, Canada and China. Per the executive orders, effective February 4, 2025, the United States will impose a:

• 25% tariff generally on all imports from Mexico
• 25% tariff generally on all imports from Canada, except for “energy resources” which have a 10% tariff
• 10% tariff on all imports from China

All three countries announced retaliatory measures are in the works.

On Friday, Reuters posted an article about a possible delay for tariffs, which sent equities higher during the morning. However, the White House shot down that story midday, and the indexes sold-off hard from there.  Many investors are looking to Monday, hoping for a reverse “buy the rumor, sell the news” effect.

As always: we cannot predict, we can only prepare.  You’ve probably noticed a lot of whipsaws your the signals going back to early December, which means it’s been a traders market (rather than a buy and hold or long-term allocator investor).  Last week was no different, and Monday will probably be more of the same.  Futures just opened and the indexes are down ~1.5%.

Protect your capital, keep your losses small, and deploy capital when probabilities are in your favor (oversold in bullish trends).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of January 26th= Uptrend

• ADX Directional Indicators: Uptrend
• Institutional Activity (Price & Volume): Uptrend
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook remains in an uptrend.

The S&P500 ( $SPX ) gained 1.7% last week.  The index is 2% above the 50-day moving average and ~9% above the 200-day moving average.

SPX Price & Volume Chart for Jan 26 2025

The ADX flipped to bullish last Monday.  Institutional activity looks okay; selling has subsided over the past two weeks.

S&P Sector Performance for Week 04 of 2025

Communications ( $XLC ) and Technology  ( $XLK ) sectors outperformed, while Energy stocks lagged ( $XLE ) with a down week for oil.

Following the improvements last week, a few more sectors moved back to bullish bias: Healthcare, Industrials, and Technology.  Materials tests a potential change at neutral. In the shorter-term, Communications, Consumer Staples, Financials, and Healthcare are overbought and Energy is oversold.

Sector Style Performance for Week 04 of 2025

The Momentum style factor was the top performer again, with a gain of 4%.  The “worst” performer was High Dividend at +0.3%.  A few style factors also showed an improvement in bias:  Small Cap Growth, Quality, and Defensive moved to Bullish, Large Cap Value improved to Neutral.  That said, Large and Mega Cap Growth, Large Cap Value, Momentum, and Quality are now overbought.

Asset Class Performance for Week 04 2025

Bitcoin ( $IBIT ) was the best performer again last week, while Oil took a breather.  In the near term, Gold and Equities are overbought; oil and the dollar are oversold.  No changes in bias.

COMMENTARY
Most of the equity market recovered from the recent round of selling, although a few sectors continue to struggle (i.e. Consumer Staples and Real Estate).  The dollar began a correction last week last week, which impacted commodities to the downside and equities to the upside.

A flurry of executive orders didn’t put a damper on U.S. equities last week, as major tariffs remain under wraps for the time being.  The next deadline is Feb 1 for a 25% tariff on Mexico and Canada  Most federal agencies are evaluating U.S. trade policy and will provide recommendations, including potential tariffs, by April 1.

Then, at the World Economy Forum, President Trump said he would “demand that interest rates drop immediately”, implying that he’ll pressure the Fed for further cuts.  Expect this to be a topic of discussion at the next FOMC meeting…which happens to be this Wednesday.

Following the FOMC, the first Q4 GDP estimate is released Thursday, followed by the latest PCE reading on Friday.

Earnings season really picks up this week, with reports from 20% and 15% of the S&P500 and Nasdaq, respectively.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of January 19th= Uptrend

• ADX Directional Indicators: Neutral
• Institutional Activity (Price & Volume): Uptrend
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook shifts back to an uptrend, after bouncing from oversold levels into a long weekend.

The S&P500 ( $SPX ) gained 2.9% last week.  The index is 0.5% above the 50-day moving average and ~7% above the 200-day moving average.

SPX Price & Volume Chart for Jan 19 2025

The ADX is neutral, and will flip to bullish with another day of gains.  Institutional activity improved last week and shifted back to bullish, with signs of accumulation and a close above the 50-day moving average.  On-Balance Volume also shows a rate-of-change increase.

S&P Sector Performance for Week 03 of 2025

Energy ( $XLE ) and Financials ( $XLF ) put in quite a week, as did Materials ( $XLB ).  Consumer Staples ( $XLP ) was the weakest section, only managing a gain of 1.2%.  Several sectors mirrored the indexes shift back to a bullish bias: Communications, Energy, Financials, and Utilities.  Technology and Industrials improved to neutral.

Sector Style Performance for Week 03 of 2025

The Momentum style factor was last week’s top performer, gaining 5%.  The “worst” performer was Large Cap Growth at +2.2%.

Much like the index sectors, style factors also showed an improvement in bias:  High Beta,  Mid, Large, and Mega-Cap growth, Mid-Cap value and Momentum all shifted to bullish, while Quality moved back to neutral.

Asset Class Performance for Week 03 2025

Bitcoin ( $IBIT ) was the best performer last week, and is almost back to even over the past 4 weeks.  The U.S. dollar was the worst performer. U.S. equities flipped from Bearish to Bullish bias, confirming the change in the market outlook.

COMMENTARY
Last week’s post touched on the quick turnaround we’ve seen in recent downtrends.   You have to go back to August-October 2023 to find one lasting longer than 4 weeks.  Of course, there’s no guarantee the market doesn’t pullback again from here and flip to a downtrend again.  The incoming Trump administration promised many executive orders on Day 1, and we need to see how buyers and sellers react to the details.

One trade-off of mechanical investing/trading systems is the whipsaw; when price movement generates successive entry and exit signals during a short period of time.  For example, a 50-day moving average cross-over signal would have tripped 6 times since mid-December; that’s about once per week.  The example process presented here, in the weekend update, uses 3 indicators to reduce the number of false signals, but no system is perfect. It’s the “price” you pay for avoiding major drawdowns.

The whipsaw is another reason to evaluate the relative performance of your holdings and weather the storm with tickers showing strength during general market weakness ( drop the zeros; stick with the heroes ).  For example, rising oil and natural gas prices have supported the Energy sector, which is up almost 8% over the past 4 weeks, despite the general weakness in equities ( $SPY dropped 1.5% ).  On the flip side, Consumer Staples fell ~6% over the same period.

Speaking of the price you pay, December inflation data showed rising prices remain an issue for the U.S. economy.  The headline consumer price index (CPI) rose for the third month in a row, although Core CPI fell 10 basis points and has been basically flat since July.

Producer prices (PPI) rose in November for the 3rd month in a row.  Core PPI was flat for the second month in a row, but again because the prior month’s reading was revised higher (up from 3.4%).

Retails sales rose 0.4% in December, slowing significantly from than November’s 0.8% increase and below expectations of 0.6%.

U.S. markets are closed Monday, on observance of Rev. Martin Luther King Jr.’s birthday, and then earnings season begins to ramp up over the remainder of the week.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.