The Safe Investing Blog

Stock Market Outlook entering the Week of April 6th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend after a historic week for U.S. equities.

The S&P500 ( $SPX ) fell 9.1%.  The index sits ~13% below the 50-day moving average and ~12% below the 200-day moving average.  It’s worth nothing the two “gaps” in lasts week’s price action (5600 to 5500 and 5400 to 5300) as potential upside targets IF the market attempts to bounce this week.

SPX Price & Volume Chart for Apr 06 2025

The Average Directional Index ( ADX ) remains bearish. Massive selling last week keeps Institutional Activity showing a downtrend as well.  On-Balance Volume ( OBV ) shifted back to bearish.

S&P Sector Performance for Week 15 of 2025

All sectors were down last week, with Technology ( $XLK ) leading for the second week in a row.  Consumer Staples, Health Care, and Utilities ( $XLP, $XLV, $XLU ) joined all the other sectors with a Bearish bias.

Sector Style Performance for Week 15 of 2025

High Beta ( $SPHB ) was the worst sector style last week.  Low Beta ( $SPLV ) and High Dividend ( $SPHD ) joined the other styles with a Bearish bias.

Asset Class Performance for Week 15 2025

Bonds ( $IEF ) were the best asset last week, while Oil ( $USO ) and US Equities were the worst.  No change in bias.

COMMENTARY
Last week was an extraordinary one for equity markets. Have you heard the saying “nothing good happens after midnight”?  Well, nothing good happens under the 200-day moving average either.

Over the past two day trading days (4/4 – 4/5), the S&P500 fell 10.5%; only the 5th time happened since 1950! Bonds and Gold were the only safe havens, and even then, Gold sold off along with everything else.

Ideally, investors sell when and what they want to sell.  It’s another reason to use a signaling process identify downtrends and adjust holdings.  But there are times when investors are forced to sell when and what they can sell (e.g. margin calls).

Prior to Thursday, selling was orderly ( $VIX lower than expected for the size of the price movement ), meaning that people were selling because they wanted to exit.  But late Thursday and into Friday, we started seeing forced selling (i.e gold).

No one knows what is going to happen this week, but there’s no shortage of opinions flying around on social media. In the midst of uncertainty, everyone scrambles for some kind of narrative, some kind of story, to explain the current situation.  In the end, it’s price that matters, not the narrative.

At the time of this post, Asian equity markets are down significantly ( Japan is down more than 8% ), and U.S. futures are 3% lower.  Don’t try to “catch a falling knife”.  Prices will recover eventually, and tickers on sale today will still be on sale when the bias moves back to bullish.

Q1 earnings season starts this week with big banks likely providing more insight on tariffs and the impact on forward guidance.

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 March 30th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend as we close out Q1.

The S&P500 ( $SPX ) fell 1.5% last week.  The index is ~5% below the 50-day moving average and ~3% below the 200-day moving average.

SPX Price & Volume Chart for Mar 30 2025

The Average Directional Index ( ADX ) remains bearish. On-Balance Volume ( OBV ) moved back to it’s trendline, so the signal shifts back to neutral.

Institutional investors wouldn’t or couldn’t provide a follow-through day for the currently rally attempt; the 3/24 move didn’t have enough trading volume and prices immediately retreated from resistance.  It’s still possible we get a follow-through day this week, but distribution days between the start of a rally and the follow-through are never a good sign and we had 2 last week.

S&P Sector Performance for Week 14 of 2025

Consumer Staples ( $XLP ) was the only sector to secure a gain last week, while Technology ( $XLK ) led to the downside.  Consumer Staples, Health Care, and Utilities ( $XLP, $XLV, $XLU ) moved to Neutral bias.

Sector Style Performance for Week 14 of 2025

Low beta ( $SPLV ) provided some shelter from last week’s selling, while High Beta sold off hard ( $SPHB ).  Not changes in bias and still a bearish picture overall.

Asset Class Performance for Week 14 2025

Gold ( $GLD ) was the best performing asset last week, while U.S. equities ( $SPY ) were the worst.  No change in bias; defensive assets remain the strongest.

COMMENTARY
Leading off with a a bit of housekeeping: corrected an issue with the performance tables, specifically the “Returns since Bias Shift” for the Bearish designation.  A minor issue, but after review, one that provides a great reminder to avoid deploying capital into bearish sectors, styles, and asset classes!

The latest rally attempt did, in fact, reveal itself to be a counter-trend bounce:

Until we see more shifts to bullish bias by sectors and styles, as well as breakouts by individual growth stocks, consider the recent move as a counter-trend bounce.

2024 Q4 GDP got a slight increase for the final estimate, coming in at +2.4%.  Unfortunately, that means slowing growth, since it’s 0.8% lower than Q4 2023.  Q1 2025 GDP is likely to “disappoint” again, coming in around 1% (for reference, 2024 Q1 was 1.6%).

February PCE showed no movement in the headline data.  Core came in at 2.8%, higher than January’s 2.7%*, which was also adjusted higher from 2.6%.  So inflation remains “sticky”, and that’s prior to any potential impact from new tariffs.

This week, we get job and survey data, in the form of ISM PMI results, JOLTS, and Non-Farm Payrolls. From a volatility perspective, the big event this week comes on Wednesday (April 2), when the current administration is expected to announce an updated trade policy, centered on reciprocal tariffs.  There’s been a lot of mixed messaging leading up to the event, and you know how market participants react to uncertainty…they hedge and /or sell.  And remember those 25% tariffs on Mexican and Canadian imports? April 2 is the expiration date for those as well.

With slowing economic growth, sticky inflation, and the threat of tariffs exacerbating both, don’t be surprised when you hear talk of “stagflation”, or even the “R” word (i.e. recession), hitting the airwaves in April.  But by that time, it’ll be old news, since U.S. equities showed their hand back in February.  Instead, use your time to manage your portfolio, making sure you’ve got minimal exposure to bearish trends, while maximizing allocations to assets, sectors, and styles that are moving to and sustaining a bullish bias.  Currently, that’s investments in precious metals, European equities, or U.S. bonds.

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 March 23rd = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend, though the indicators improved and are on the verge of shifting back to an uptrend.

The S&P500 ( $SPX ) rose 0.5% last week.  The index is ~4% below the 50-day moving average and ~1% below the 200-day moving average.

SPX Price & Volume Chart for Mar 23 2025

Some improvement in the technical indicators last week.  First things first, the Average Directional Index ( ADX ) remains bearish.  The potential rally start from 3/14 remains intact, but we’re still waiting for a follow-through day, which puts Institutional activity in mixed territory.  On-Balance Volume ( OBV ) moved back to bullish.

S&P Sector Performance for Week 13 of 2025

Energy ( $XLE ) outperformed other sectors for a second week in a row, one of the few that are bullish bias.  Staples, Materials, and Utilities ( $XLP, $XLB, $XLU ) were tied for worst performance.

Sector Style Performance for Week 13 of 2025

Most sector styles were up last week, with high beta ( $SPHB ) leading and high dividend ( $SPHD ) lagging.  No changes in bias; risk-off styles are the only bullish areas, and even those returns are relatively small.

Asset Class Performance for Week 13 2025

A decent week across asset classes last week, with Oil ( $USO ) leading to the upside. Bitcoin ( $IBIT ) was the worst performer.  No changes in the bias here either.

COMMENTARY
The FOMC chose to keep U.S. overnight interest rates unchanged, as expected. They noted uncertainty around the economic outlook, but still see rates down 0.5% by the end of the year.

This week provides us with the final edition of Q4 GDP figures ( no surprises expected there ), and February PCE.

Despite the improvement in market outlook signals, most of the sectors and styles remain bearish bias, and are overbought after last week.  Ideally, you’ll want to see a) market leadership (e.g. IBD Innovators – $FFTY ) front running equities to the upside, and b) financials and technology support any change in the market outlook (i.e. move to bullish bias), due to their large institutional ownership.

The name of the game this week is hurry up and wait.  Until we see more shifts to bullish bias by sectors and styles, as well as breakouts by individual growth stocks, consider the recent move as a counter-trend bounce.

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 March 16th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend after another failed rally attempt.

The S&P500 ( $SPX ) fell 3.1% last week and tested the 200 day moving average.  The index is ~5% below the 50-day moving average and ~2% above the 200-day moving average.

SPX Price & Volume Chart for Mar 16 2025

All three indicators remained bearish.  Another week, another failed rally attempt, as institutions weren’t in a buying mood and used the 3/7 rally attempt as another exit opportunity.  Sticking to the script, the market put in another potential rally start on Friday, although this time the trading volume was low.

S&P Sector Performance for Week 12 of 2025

Energy ( $XLE ) and Utilities ( $XLU ) were the only green sectors last week.  Discretionary ( $XLY ) was the worst sector.  The bias for Communications ( $XLC ), Staples ( $XLP ), and Materials ( $XLB ) moved to bearish, Real Estate ( $XLRE ) moved to Neutral.  Energy ( $XLE ) and Utilities ( $XLU ) moved back to bullish.

Sector Style Performance for Week 12 of 2025

No winners across the sector styles last week; Defensive led to the downside with a drop of 3%.  Large-cap value ( $IWX ) and Defensive ( $POWA ) moved to bearish bias.

Asset Class Performance for Week 12 2025

Gold led to the upside last week, continuing its recent run atop the leaderboard.  Bitcoin and US equities were the worst performers.  Dollar met resistance, shifting back to bearish bias from neutral.

COMMENTARY
Economic data didn’t ring any alarm bells last week.  January JOLTs was up slightly versus December.  February inflation data easing from a year over year perspective.  Headline and core consumer price index ( CPI ) fell 20 basis points.

Producer prices ( PPI ) fell more than CPI, with Headline and Core PPI down 0.5% and 0.4%, respectively, thanks to upward revisions to January data (+0.2%).

This week is likely to continue to trend of higher volatility, with retails sales, housing data, and another FOMC interest rate decision, not to mention any additional tariff talk.

Last weeks price action looks to be a consolidation of the recent sell off, which could turn into a near term bottom.  But volatility is still elevated ( i.e. >20 ), and most sectors and styles are bearish bias, so positive price action has a higher probability of being a counter-trend rally than the start of a new trend.  Either way, the ADX should turn around first, and we’ll need to see confirmation of Friday’s rally attempt sometime after Wednesday this 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.

Stock Market Outlook entering the Week of March 9th = Downtrend

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

ANALYSIS
The stock market outlook remained in a downtrend last week after last week’s rally attempt failed. Equities get a second chance this week, thanks to another strong Friday rally.

The S&P500 ( $SPX ) fell 3.1% last week and tested the 200 day moving average.  The index is ~4% below the 50-day moving average and ~1% above the 200-day moving average.

SPX Price & Volume Chart for Mar 09 2025

On-balance volume shifted to bearish last week, reflecting the high volume selling experienced since mid-February.  Institutions weren’t in a buying mood last week either, instead using the 2/28 rally attempt as a exit opportunity.  The market will try again this week, after putting in another strong Friday session.  That said, the ADX shows a strengthening downtrend taking hold as we entered the weekend.

S&P Sector Performance for Week 10 of 2025

Healthcare ( $XLV ) was the only shelter from last week’s sell-off, basically breaking even.  Financials ( $XLF ) were the worst sector.  The bias for Energy ( $XLE ), Financials ( $XLF ), and Industrials ( $XLI ) fell to bearish.   Communications, Materials ( $XLB ), and Utilities are testing their support levels.

Sector Style Performance for Week 10 of 2025

Like Healthcare, the High Dividend ( $SPHD ) sector style was the only winner last week. Mega-cap growth ( $OEF ), Momentum and Quality styles fell to bearish bias, while Large-cap value ( $IWX ) is testing support at a neutral bias.

Asset Class Performance for Week 10 2025

A bit of a comeback for Bitcoin; probably a response to all the crypto-related announcements out of Washington D.C. last week.  Otherwise, Gold was the other safety play, while Oil led to the downside.  The dollar also fell to bearish bias, thanks to an unusually large decline during the week.

COMMENTARY
First things first: the smart money is selling the rips, not buying the dips, which means U.S. equities are in sell mode. Whether it’s initial or reciprocal tariffs, government upheaval, or geopolitical turmoil, the world is an increasingly uncertain place at this moment in time. And financial markets do not react well to uncertainty, so you’re seeing risk-off trades.

Rising foreign currencies have pressured the U.S. Dollar in recent weeks, unwinding most of the post-election rally. Of greater interest is the bond market, specifically Germany’s: yields on government bonds have spiked after they announced changes to their “debt brake” and an historic boost in spending. The increase in bond yields comes despite the European Central Bank cutting interest rates for the fifth time in a row and lowering its growth forecasts for the Eurozone; likely an attempt to mitigate the impact of tariffs. These developments impact the profitability of various carry trades, changing capital flows and volatility throughout the global financial system.

January macroeconomic data ( ISM PMI Surveys ) showed slightly lower manufacturing activity and slightly higher service-related activity. February non-farm payrolls showed a month over month increased, but fell short of forecasts. At a speech in Chicago, Federal Reserve Chairman Powell stated that “the US economy continues to be in a good place,” and while they aren’t focused on the uncertainty caused by tariffs, they are waiting for more data to determine if and when interest rate adjustments are needed. So there’s no “Fed put” at the moment.

If you’re looking hold a position longer than a day or two, you want to buy the best of the best when you have the highest odds of success. Now is the time to prepare your watch lists for the next buying opportunity ( big up days with higher than average trading volumes, $VIX < 20, bullish bias, etc. ). There are only a few places with a bullish bias ( see above ), and their largely defensive in nature.

This week we get January JOLTs, February CPI & PPI, and March Consumer Sentiment.

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 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.