S&P 500 Daily Update for Wednesday May 7, 2025

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Market Update Summary for Tuesday, May 6, 2025, and Outlook for Wednesday, May 7, 2025
Market Performance on May 6:
The market continued its decline, closing down 0.77% on below-average volume.
The day started with a gap lower open below S2 at 5607, briefly dropping below 5600 before recovering above S2. It reached S1 at 5629 but closed at S2.
The market remains positive in the short and intermediate term (above the 20- and 50-period moving averages) but negative in the long term (below the 200-day moving average).
The pullback appears to be a decline rather than a trend reversal, but further declines could signal a more significant shift.
Key Observations:
Technical Indicators: The market becoming less overbought in the short term, with indicators such as the Williams %R and CCI’s dropping off the extreme list. The intermediate-term TTM Squeeze is turning negative but still extreme positive, and the bullish percent index for the S&P is no longer extreme positive.
Volume and Sentiment: Volume remains below average. The VIX rose to 24.76, reflecting increased volatility. Sentiment is positive at 57, unchanged despite the down day.
Interest Rates and Bonds: The 10-year yield fell to 4.31% from 4.34%, and the bond market appears stabilized. The yield curve (10-year to 3-month) is inverted again.
Geopolitical and Economic Factors:
Tariff concerns and cautious corporate guidance (e.g., Ford and Mattel) are weighing on the market. Ford warned tariffs could cut $1.5 billion from profits.
The trade balance hit a record deficit of -$140.5 billion, likely due to front-running imports ahead of tariffs.
Sector Performance: Most sectors (e.g., tech, healthcare, discretionary) were down, with energy slightly up. Defensive sectors such as staples and utilities showed mixed performance.
Outlook for May 7:
FOMC Announcement: The Federal Reserve’s announcement at 2 p.m. Eastern is the key event. Interest rates are expected to remain unchanged (4.25%-4.5%), but the market will scrutinize statements and the press conference for hints of future policy.
Economic Data: MBA Mortgage Applications Index and consumer credit data will be released, but the FOMC decision will dominate attention.
Market Outlook:
Short-term: Positive, as the market remains above the 20-period moving average, but declining after hitting resistance at 5700.
Intermediate-term: Positive, above the 50-period moving average, but a loss of this level could shift the outlook.
Long-term: Negative, below the 200-day moving average.
Pivot Points for Wednesday: Watch R1, R2, S1, and S2 levels, with additional pivot points calculable at pivotpointcalculator.com if the market moves beyond R2 or S2.
Warning Signs:
Negative signals from the Swenlin Trading Oscillator, long-term growth-to-value ratios, and discretionary-to-staples ratios.
Mixed signals from the smart money indicators (e.g., positive Chaiken Money Flow, negative Chaiken Oscillator).
Declining bullish percent index and moving average studies (100 and 200 below 50).
Conclusion:
The market is in a pullback phase, with short- and intermediate-term trends still positive but showing signs of weakening. The long-term trend remains negative. The Fed’s announcement on Wednesday will be critical, alongside ongoing tariff and geopolitical developments. Investors should monitor the 50-day moving average and key pivot levels for signs of support or further declines.

PDF of Charts and Slides used in today's video:
https://drive.google.com/file/d/1K2hl6USYfJ3srl-S6TayTt0avs7mhlYv/view?usp=sharing

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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!