The Safe Investing Blog

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.

Stock Market Outlook entering the Week of January 12th= Downtrend

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

ANALYSIS
The stock market outlook shifts to a downtrend, after failing to recover support levels and making lower lows on higher trading volume.

The S&P500 ( $SPX ) dropped 1.9% last week.  The index is ~2% below the 50-day moving average and ~5% above the 200-day moving average.

SPX Price & Volume Chart for Jan 12 2025

The ADX remains bearish, overall trend strength is weak.  Institutional activity wasn’t particularly strong, struggling to bounce from the 50-day moving average.  During that time, we’ve accumulated enough distribution days (>5) to move this signal from mixed to bearish.  On-Balance Volume faded since early December, but remains in bullish territory for now, thanks to the lower trading volumes during the holiday season.

S&P Sector Performance for Week 02 of 2025

Energy ( $XLE ) was the strongest sector again last week, benefiting from strong performance in oil and gas.  Real Estate ( $XLRE ) led to the downside. Communications, Financials, and Technology, as well as the overall index ( $SPY ), fell to a bearish bias.  Consumer Discretionary ( $XLY ) remains in a bullish trend, though that sector’s returns haven’t been positive over the past 4 weeks.  Energy provided to “best” returns during the same span, only down ~3%; real estate was the worst performer, losing ~11%.

Sector Style Performance for Week 02 of 2025

High Beta was last week’s top performer, securing the only positive return.  High Dividend led to the downside.  High Beta and Momentum fell from Neutral to Bearish; Large Cap and Mega Cap shifted from Bullish to Neutral.

Asset Class Performance for Week 02 2025

Oil ( $USO ) led the way higher again last week, edging out Gold ( $GLD ).  Bitcoin ( $IBIT ) was the worst performer.  Gold jumped from bearish to bullish bias.

Generally speaking, physical commodities have outperformed other asset classes over the past 4-weeks.  Within the commodity space, it’s been oil, natural gas, and copper leading the way, while precious metals and agriculture have struggled.

COMMENTARY
With the market outlook fell to a downtrend last week, it’s time to drop the zero’s and get with the hero’s in your portfolio.  Recent downtrends have been short-lived, and On-Balance Volume gives us some hope this one will be similar.  So stick with tickers showing signs of strength right now (higher highs and accumulation); those will be the names that lead the market higher when the latest round of selling ends (i.e. when bullish bias returns).  If you haven’t already, consider reducing exposure to tickers that are floundering.

On the Macroeconomic front, December Services PMI showed continued expansion, coming in at 54.1; higher than November and above expectations.  November job openings (JOLTs) also increased, beating expectations and an upwardly revised October figure.  And December NFP (Non-farm Payrolls) was well above expectations and a lowered November data point.

Remember the stock market is not the economy.  They’re related, but not the same.  The economy is sum of all economic activity, including the production and consumption of goods and services, and we get updates monthly at best.  At worst, data can be revised more than 1 year after the fact.  The stock market is collection of equity stakes in publicly traded companies and is updated almost continuously.    The tables above show equities haven’t performed well over the past 4 weeks.  We won’t start getting the matching economic data until next later this month.

Most sectors and styles are bearish, and even the ones showing some strength are still in the red.  This price action tells us that sellers have been more aggressive than buyers in the equity markets.  There are many potential causes of this behavior; most of them are interrelated.  For example, some may expect weak earnings and guidance because of a strong dollar, higher interest rates, higher commodity prices, and/or the potential impact of higher tariffs across the globe.  Earnings season starts this Wednesday with reports from large financial firms ($JPM, $C, $WFC)…

Whatever the cause, you want to put your money to work when conditions are favorable for future gains:  higher highs and higher lows in price (ADX and Bias) , caused by institutions accumulating shares and capital inflows (Institutional Activity and On-Balance Volume).   In the recent past, downtrends have been short-lived, so we could see better conditions next month, next week, or even tomorrow.

This week, we get the latest retail sales and inflation (Producer and Consumer Price Index) numbers.

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 5th= Uptrend

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

ANALYSIS
Happy New Year!  The stock market outlook starts 2025 in an uptrend, but is working off a December hangover.

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

SPX Price & Volume Chart for Jan 05 2025

Still no change in the signal set, so no change in the overall outlook.  The ADX highlights the bearish price action during the back-half of December and Institutions weren’t doing much of anything for the last two weeks, both of which weakened the longer-term bullish view from the On-Balance Volume level.

S&P Sector Performance for Week 01 of 2025

Energy ( $XLE ) was the strongest sector last week, one of two that finished higher.  Consumer Discretionary ( $XLY ) led to the downside, dropping 3.3%.  Sectors like Materials, Energy, and Real Estate have really struggled over the past 4 weeks, showing the importance of putting money to work when and where the trend is in your favor.  Speaking of trends, Financials ( $XLF ) and the S&P500 ( $SPY ) fell from bullish to neutral bias.

Sector Style Performance for Week 01 of 2025

Another poor week across the investing styles; all finished in the red.  High Dividend was the least bad, while Large Cap Growth led to the downside.  High Beta shifted from Bullish to Neutral bias.

Asset Class Performance for Week 01 2025

Oil ( $USO ) led the way higher again last week; U.S. equities were the worst performer.  And as mentioned above, the S&P500 shifted to a Neutral bias from Bullish.  The dollar also shifted from Bullish to Neutral, but that move is an artifact of my data providers accounting for December’s dividend; the price action remains strong.

COMMENTARY
Equity indexes have entered an important phase, as they’re now testing support levels (i.e. the shift to Neutral Bias for the $SPY).  Most sectors / styles developed a bearish bias.  4-week performance was poor at best and only a small sliver of the market managed to deliver any gains at all (Discretionary / Large Cap).

The good news?  There will be better entry points in the future…just need to wait for the trends to turn positive.

On the Macroeconomic front, December Manufacturing PMI came in at 49.3; higher than November and expectations, but was still below 50.

This week is ISM services, JOLTS, and Non-Farm Payrolls.  Also, the U.S. market is closed on Thursday (9th) for a National Day of Mourning in honor of President Jimmy Carter.

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.