The Safe Investing Blog

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.

Stock Market Outlook entering the Week of December 29th= Uptrend

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

ANALYSIS
The stock market outlook remains in an uptrend heading into 2025.

The S&P500 ( $SPX ) gained 0.7%.  The index is 0.5% above the 50-day moving average and ~8% above the 200-day moving average.

SPX Price & Volume Chart for Dec 29 2024

No change in the signal set, so last week’s analysis remains valid and the overall outlook is unchanged:

Short-term (ADX) is bearish, responding to the lower lows and lower high.  Mid-term (Institutional Activity) is mixed, with the index trading down to the 50-day moving average, but only a small number of distribution days.  Long-term (On Balance Volume) is still bullish, though does show the impact of selling pressure since the start of the month.

S&P Sector Performance for Week 52 of 2024

Technology ( $XLK ), led the way again, this time rising 2.2%. Consumer Staples ( $XLP ) led to the downside, dropping 0.5%.  Financials ( $XLF ) rose from neutral back to bullish.

Sector Style Performance for Week 52 of 2024

After a rough stretch, sector styles rallied last week.  Momentum outperformed; Defensive underperfomed.  Momentum shifted from Bearish to Neutral trend.

Asset Class Performance for Week 52 2024

Oil ( $USO ) led the way higher last week, while Bitcoin was the worst performer.   The U.S. dollar was flat for the week; a $1.32 dividend for the $UUP etf accounted for the 4.5% drop in price.

In what seems like a weekly occurrence, Oil flipped back to bullish trend, from neutral.  That said, the chart looks appears to show the waning stages of a bottoming process (a series of higher lows since late October).

COMMENTARY
Not really a December to remember for U.S equities. Hopefully, a quiet week was just what equities needed.

One macro datapoint to share: November durable goods orders fell 1.1% M/M, versus a 0.8% rise in October.

Another shortened week of trading, with U.S. market closed on Wednesday for New Year’s Day.

Whether you crushed it or got crushed, may your 2025 be better than your 2024. Wishing you joy and good cheer as we close out the holiday season.

Best to Your Week, and Happy New Year!

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 December 22nd= Uptrend

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

ANALYSIS
The stock market outlook remains in an uptrend, despite the lump of coal delivered by equities last week.

When all was said and done, the S&P500 ( $SPX ) lost 2%.  The index is basically resting on the 50-day moving average and ~7% above the 200-day moving average, thanks to a boost from Friday’s massive options expiration.

SPX Price & Volume Chart for Dec 22 2024

The ADX ( Average Directional Index ), Institutional Activity and OBV ( On-Balance Volume ) aren’t providing a clear signal yet, so the overall outlook remains unchanged.

Short-term (ADX) is bearish, responding to the lower lows and lower high.  Mid-term (Institutional Activity) is mixed, with the index trading down to the 50-day moving average, but only a small number of distribution days.  Long-term (On Balance Volume) is still bullish, though does show the impact of selling pressure since the start of the month.

S&P Sector Performance for Week 51 of 2024

While the index itself lost 2%, the SPY’s dividend payment eased the sting of last week’s loss a bit. That said, a rough week across the sectors; all of them ended in the red.

The least “bad” was Technology ( $XLK ), which lost 1.3%.  Energy ( $XLE ) led to the downside, dropping almost 6% and doubling its losses over the past 4 weeks.

Bullish trends remain for the sectors containing Mag 7 companies.  Consumer Staples ( $XLP ) and Industrials ( $XLI ) dropped into bearish trends (i.e. downside risk higher probability then upside potential),  and Financials ( $XLY ) fell to neutral.

Sector Style Performance for Week 51 of 2024

Much like the equity sectors, equity styles also had a rough week, showing limited strength outside Mag 7 related categories.  Large Cap Growth ( $IWF ) was the best performing sector style again, but this week only managed to limit the losses.  Small Cap Value ( $IWN ) fell almost 6%, one week removed from moving to bearish trend.

Other styles moving to bearish trends this week:  High Beta, Small Cap Cap and Mid-Cap Growth, Small, Mid, and Large Cap Value, Momentum, Quality and Defensive.

Asset Class Performance for Week 51 2024

Diversification wasn’t going to help your money last week.  All asset classes felt the pain.  The U.S. dollar led to the upside, which does tend to hurt dollar-denominated asset prices (and other currencies).  Gold was the best performer, although it’s still in a bearish trend.  Bitcoin led to the downside, but remained in a bullish trend.  Oil ( $USO ) dropped back to neutral trend again last week.

COMMENTARY
Volatility returned last week, in a big way, sparked by the markets response to the FOMC meeting.

The FOMC cut the overnight interest rate another 0.25%, which wasn’t a surprise.  Perhaps more impactful was their increase in inflation expectations for next year, sparking fears of a pause in rate cuts and renewing a focus on the un-inversion of the yield curve (i.e. rising interest rates) over the past quarter.

Equities headed south almost immediately after the press release, and the selling accelerated into the close of the session.  Friday’s options expiration reversed some of the damage, and indexes held up fairly well thanks to some of the Mag 7 companies and their latest dividend.

Q3 GDP was revised slightly higher, for a final reading of 3.1%.  If you dig a bit into the y/y data, you’ll see that real GDP declined versus 2023 Q3.  As for the Fed’s preferred inflation metric (PCE), the Headline figure for November came in slightly higher, while core remained unchanged at 2.8%.

“What to do now” is a question on many minds, with regard to adjusting portfolios and reallocating capital.  It’s not the time to liquidate everything; market participants will need time to respond and adjust their asset allocations without moving the markets too much.

Speaking of changes, big moves by institutions are unlikely until January, thanks to lower trading volumes over the holiday season.  There are only 5.5 trading sessions left this year, close early on Tuesday and remain closed until Thursday.  Intraday trading volumes are likely lower than average as well.

Even if your tea leave reading is on hold, the recent market moves do highlight the importance of signal based rules, pre-set targets, etc.:  If this, then that. 

If a ticker trips a condition and generates a signal in your process, you execute.  Then, while you’re waiting for the next signal, you evaluate the prior trade.  Did the process work as intended? If not, make improvements.  With the end of the year just around the corner, now is a great time to review your 2024 performance and adjust for 2025.

Best to Your Week, Happy Holidays and a Very Merry Christmas!

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 December 15th = Uptrend

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

ANALYSIS
The stock market outlook remains in an uptrend, even though the “Santa Claus rally” too a bit a of a breather last week.

The S&P500 ( $SPX ) fell 0.6%.  The index sits ~2.5% above the 50-day moving average and ~10% above the 200-day moving average.

SPX Price & Volume Chart for Dec 15 2024

The ADX ( Average Directional Index ), Institutional Activity and OBV ( On-Balance Volume ) are all in bullish territory.

S&P Sector Performance for Week 50 of 2024

Another tough week for the sectors, despite relative strength in the overall index. Consumer Discretionary ( $XLY ) led to the upside for the third week, while Materials ( $XLB ) led to the downside.  Consumer Staples and Industrials are at a Neutral trend, Healthcare ( $XLV ), Materials ( $XLB ), Real Estate ($XLRE ) , and Utilities ( $XLU ) are back to bearish trends.

Sector Style Performance for Week 50 of 2024

Large Cap Growth ( $IWF ) was again the best performing sector style…the only positive return last week.  Small Cap Growth ( $IWO ) was the worst.  Low Beta ( $SPLV ), High Dividend ( $SPHD ) and Large Cap Value ( $IWX ) dropped into bearish trends.

Asset Class Performance for Week 50 2024

Oil ( $USO ) put in a big rally last week and led assets higher.  Bonds ( $IEF ) were the worst performer again thanks to rates rising into the CPI/PPI prints.  Bonds also dropped back to bearish trend.

COMMENTARY
Last week was a good example of macroeconomic trends (higher interest rates and commodity prices) filtering through to equity sectors (materials, real estate and utilities down).  Energy is lagging, since it’s usually correlated with movements in oil-based commodities, but hasn’t regained a bullish bias.

November inflation data was higher than expected for the second month in a row; still not enough to take the next rate cut off the table.  The consumer price index (CPI) rose again in November, while Core CPI was unchanged.

Producer prices (PPI) rose in November, and that’s on top of a 20 basis point increase to Octobers data.  Core PPI was flat, but only because October’s reading was revised 30 basis points higher (up from 2.6%).

This week we get retail sales on Tuesday, the FOMC interest rate decision on Wednesday, the final Q3 GDP figure on Thursday, and November PCE 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 December 8th = Uptrend

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

ANALYSIS
The stock market outlook remains in an uptrend as investors look forward to the annual “Santa Claus rally”.

The S&P500 ( $SPX ) rose 1.5%.  The index sits ~4% above the 50-day moving average and ~11% above the 200-day moving average.

SPX Price & Volume Chart for Dec 08 2024

The ADX ( Average Directional Index ), Institutional Activity and OBV ( On-Balance Volume ) are all in bullish territory.

S&P Sector Performance for Week 49 of 2024

A tough week for several sectors, but oddly enough it’s the same best and worst performers: Consumer Discretionary ( $XLY ) led to the upside, Energy ( $XLE ) to the downside.  Rate sensitive sectors have struggled to find their footing, flipping back and forth between bullish and bearish trends:  Energy ( $XLE ), Real Estate ( $XLRE ) , and Utilities ( $XLU ) are back to neutral trends.  Materials ( $XLB ) dropped from bullish to bearish.

Sector Style Performance for Week 49 of 2024

Large Cap Growth ( $IWF ) was the best performer last week, while High Dividend ( $SPHD ) was the worst  All the Value plays also struggled.  High Dividend and Large Cap Value also slipped from bullish to neutral trend.; no surprise since they have the lowest returns over the past 4 weeks.

Asset Class Performance for Week 49 2024

Bitcoin ( $IBIT ) was the best performing asset last week, after briefly dipping back below 100,000.  Oil ( $USO ) was the worst performer again.  Gold continues to struggle, dropping from neutral to bearish trend with other commodities.  Bonds slipped back from bullish to neutral.

COMMENTARY
With the general market content to grind higher since mid-November, investors should be content with riding their winners into the new year, while trimming any names showing weakness (high volume selling, lower lows and lower highs over the past few weeks).

ISM Manufacturing PMI rose in November, but still showed a contraction in place (reading < 50).  The Services version fell more than expected, but still showed an expansion in place (reading > 50).

Labor data showed more job openings (JOLTs) and higher payrolls (NFP) than expected.  That said, unemployment ticked 10 basis points higher to 4.2%

This week, we’ll get CPI and PPI data for November.

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 December 1st = Uptrend

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

ANALYSIS
The stock market outlook starts the final month of 2024 in an uptrend.

The S&P500 ( $SPX ) rose 1.5%.  The index sits ~3% above the 50-day moving average and ~11% above the 200-day moving average.

SPX Price & Volume Chart for Dec 01 2024

The ADX ( Average Directional Index ), Institutional Activity and OBV ( On-Balance Volume ) are all in bullish territory.

S&P Sector Performance for Week 48 of 2024

Most sectors rallied, with Consumer Discretionary ( $XLY ) leading the way.  Energy ( $XLE ) was the worst performer with a 1.6% loss.  Longer-term, Consumer Staples ( $XLP ), Materials ( $XLB ), and Real Estate ( $XLRE ) regained bullish trends.

Sector Style Performance for Week 48 of 2024

Small Cap Growth ( $IWO ) led sector styles higher for the second weak in a row.  On the lower end of the performance spectrum while Large Cap Growth ( $IWF ), Mega Cap Growth ( $OEF ), and Momentum ( $MTUM ) couldn’t match the general market gains, but still closed up for the week.  All sector styles have a bullish bias.

Asset Class Performance for Week 48 2024

Bonds ( $IEF ) led the way last week, while Oil ( $USO ) was the worst performer.  Commodities are struggling to regain bullish trends in the midst of geopolitical turmoil; oil returned to a bearish trend 1 week after a bullish flip and gold retreated slightly to a neutral trend designation.

COMMENTARY
The FOMC minutes were a nothing-burger, as was the 2nd estimate of Q3 GDP (no change).

Headline PCE for October rose slightly versus September, though it was below last year’s 3% figure.  Core PCE also rose to the highest level since June.

This week, November ISM Manufacturing & Services PMI hit the wires, along with the latest JOLTs and NFP figures.  Black Friday and Cyber Monday sales estimates could also influence price action in the retail sector.

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.