S&P 500 Weekly Market Update for Feb 24 28, 2025

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Market Performance (February 18th - 21st)
The week started strong, with the S&P 500 setting new all-time highs on Tuesday and Wednesday, despite the markets being closed Monday for President's Day. Thursday saw a downturn, followed by a significant drop on Friday, erasing the week's gains. The S&P fell 1.7% for the four trading days, closing down 1.66% from the prior Friday on above-average volume, largely due to options expiration. The Dow and NASDAQ each declined 2.5%, while small caps (Russell 2000) took the hardest hit, dropping 3.7%. Mid and small caps are now negative year-to-date, reflecting ongoing frustration as they fail to capitalize on seasonal expectations like the January effect.
The market held above the 20-period moving average until Friday’s decline pushed it below, flipping the short-term trend to negative. However, the 50-period moving average held as support, keeping the intermediate and long-term trends positive on both daily and weekly charts. Growth underperformed value, and discretionary lagged staples—a shift toward defensive sectors like staples, utilities, and healthcare, which either rose or fell less than growth areas like tech and discretionary.
Key Drivers and Observations
Friday’s sell-off was influenced by multiple factors:
Options Expiration: Amplified volatility and volume, contributing to the sharp decline.
UnitedHealthcare: A Department of Justice investigation into its Medicare Advantage billing practices triggered a steep drop, dragging the Dow and broader market lower.
Economic Data: Consumer sentiment fell, housing data was mixed, and Walmart’s disappointing earnings hit retail. The Leading Economic Index rose above recessionary levels, offering some optimism, but inflation concerns grew as commodities (CRB Index) rose.
Valuation Worries: High P/E ratios, a concern for years, resurfaced as a narrative, though the market has shrugged this off before.
Political/Geopolitical Noise: Trump’s executive orders, "Doge," tariffs (e.g., 25% auto tariff set for April 2nd), and global tensions (Russia-Ukraine, Middle East) added uncertainty.
Interest rates dipped to 4.42% on the 10-year yield (below the 4.5% threshold), potentially cushioning stocks, but the dollar weakened, and commodities rose, stoking inflation fears. Sentiment turned pessimistic, with the VIX jumping to 18 (still below 20), and the Smart Money Indicators showed mixed signals—some weakening, though long-term trends held.
Technical and Sector Insights
The S&P closed near the 50-day moving average, with weekly charts showing it above the 13-week moving average but testing shorter-term supports levels. Small caps hit their 50-week (200-day) moving average, a key level to watch for a bounce or breakdown. The Advance-Decline Line remained positive, with volume outperforming price, but momentum weakened across short, intermediate, and long-term weekly indicators (e.g., Chaiken Money Flow, PMOs declining). The market remains non-trending (ADX below 20), suggesting a lack of clear direction.
Sector performance highlighted a defensive tilt: staples and utilities rose, healthcare held up relatively well, while tech, discretionary, and communication services lagged. Small-caps and mid-caps underperformed large caps, and growth sectors (e.g., Tesla, Amazon-driven discretionary) faced pressure. The broader S&P and NYSE showed resilience compared to the Mega-Caps.
Outlook (February 24th - 28th)
The outlook is cautious, with a negative short-term bias due to Friday’s momentum loss and seasonal weakness in the second half of February, especially in a post-election year. The intermediate and long-term trends remain positive, supported by the 50-period moving average, but cracks are appearing—growth vs. value and discretionary vs. staples shifts suggest potential defensiveness. Key levels to watch include the S&P’s 50-day moving average and small caps’ 200-day average. A bounce could occur if the Smart Money steps in, but persistent selling might signal a deeper pullback.
Upcoming data includes consumer confidence (Tuesday), GDP second reading (Thursday), and core PCE inflation (Friday)—the Fed’s preferred gauge. The markets expect rates to hold steady at 4.25%-4.5% through March and May. Geopolitical risks and tariff developments could sway sentiment. For now, it’s unclear if this is a temporary pullback or the start of something more negative, requiring day-to-day monitoring.

Link to The SPX Investing Program Overview Video: https://youtu.be/rkvOOZxMW00?si=FPT-g7SXzPo-MdW8

DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!