A Quiet Climb with Signs of Fatigue

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Market Summary for Wednesday, May 14, 2025, and Outlook for Thursday, May 15, 2025
Wednesday Market Recap:
Market Performance: The market opened slightly higher, hovering near the psychological 5,900 level for the S&P 500. It traded sideways in a tight range between 5,900 and the daily pivot at 5,879, closing up 0.1% on below-average volume, marking a positive but lackluster day.
Market Sentiment: Optimism from U.S.-China trade talk progress lingered, but signs of fatigue are emerging with short-term negative divergences—price rose, but many momentum indicators weakened. The SPX remains positive in short, intermediate, and long-term timeframes but is still in a long-term downtrend, though above key moving averages.
Key Observations:
Interest Rates: The 10-year Treasury yield rose to 4.53%, raising concerns as stocks may react
Volatility: VIX dropped to 18.62, below the 20 threshold, indicating reduced fear but still elevated compared to recent years.
Sector Performance: Mega caps, semiconductors, and growth stocks outperformed, while staples, industrials, energy, and real estate showed weakness.
Technical Indicators: Short-term overbought conditions persist (e.g., StochRSI, Williams%R, CCI (14(20), TTM Squeeze), with negative divergences in advance-decline lines, McClellan Oscillator, and bullish percent indexes signaling potential short-term weakness.
Economic Data: Tuesday’s CPI report showed lower-than-expected inflation (headline +0.2%, core flat), boosting Tuesday’s market. Wednesday’s MBA Mortgage Applications Index rose 1.1%, and NFIB Small Business Optimism dipped to 95.8.
Sentiment: Sentiment improved to 70 (nearing extreme positive at 75), and recession odds were revised lower (Goldman Sachs at 35%, Bloomberg at 40%).
Thursday Outlook (May 15, 2025):
Economic Calendar: A busy day with key reports including Jobless Claims, Retail Sales, PPI, Empire State Manufacturing, Philadelphia Fed, Industrial Production & Capacity Utilization, Business Inventories, and NAHB Housing Market Index. Fed Chair Powell’s speech could overshadow these, as his comments often drive market reactions.
Market Bias: Positive across short, intermediate, and long-term timeframes, but overbought in the short term with potential for profit-taking due to negative divergences and resistance at 5,900.
Seasonal Trends: Options expiration week tends to be slightly negative, but post-election years are historically positive during this period.
Key Levels: Watch the 5,900-resistance level.
Focus Areas:
Monitor Powell’s speech for cues on monetary policy, especially with rising yields.
Track trade talk developments and tariff-related news, as these continue to influence sentiment.
Growth-to-value ratios are improving (favoring growth), but long-term trends remain negative, warranting caution.
Conclusion: The market is positive but showing signs of short-term exhaustion, with negative divergences and rising interest rates as key concerns. Thursday’s economic data and Powell’s speech will likely dictate near-term direction, with 5,900 as a critical level to watch.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/1Dye-NDAUJw5FuT5RCXeo_sclmeTc7DW7/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!