Market Recap May 20, 2025 Sideways Action, Defensive Sectors Outperformed, Outlook for May 21

Link to The SPX Investing Program https://spxinvesting.substack.com

Link to The Daily Pivot Newsletter: https://thedailypivotnewsletter.substack.com/

Join this channel to get access to perks:
https://www.youtube.com/channel/UCxlaGAKm2ApEs13O1gWDltg/join

Market Summary for Tuesday, May 20, 2025. Outlook for Wednesday May 21, 2025
Market Performance: The S&P 500 experienced a slight down day with below-average volume, continuing a sideways trend that has been developing. The S&P closed down 0.39%, just below the daily pivot at 5943, after finding support at S1 (5917) and seeing late-day buying.
Market Health: Despite recent weakness, the market remains healthy, consolidating overbought conditions through sideways movement or slight declines. A stronger downward conviction could signal a shift in market character.
Technical Indicators:
Short-Term: The market is above the 20, 50, and 200-period moving averages, indicating positive short, intermediate, and long-term trends. Indicators such as the StochRSI, Williams %R, and CCI 20 remain positive with other short-term indicators suggesting a continuation of overbought conditions. The 20-period moving average is far from price, indicating potential mean reversion.
Intermediate-Term: Momentum oscillators (e.g., PMO, CMB composite) are extreme positive, with the McClellan Oscillator and Summation Index showing strength but some negative divergences. The bullish percent indexes for S&P 500 and NASDAQ 100 are very high, indicating potential exhaustion.
Long-Term: The market is above the 200-day moving average but in a downtrend, with the 10-year yield at 4.48% (below the 4.5% threshold where stocks may react negatively).
Sector Performance: Defensive sectors (Staples, Utilities, Healthcare) outperformed, while growth sectors (Tech, Discretionary, Communications) lagged. The Magnificent Seven has underperformed so far in 2025, down 5% compared to the S&P’s 1% gain.
Sentiment and Volatility: Sentiment is positive at 69 (down from 71), with caution advised above 75. The VIX remains below 20, signaling low fear. High-yield spreads are tight at 367 basis points, suggesting no immediate recession concerns.
Economic and Geopolitical Factors: No major economic reports were released. Uncertainty surrounds the reconciliation bill, contributing to market hesitation. The dollar fell back below 100.
Intraday Action: The market opened lower, lacked significant swings, and chopped around the daily pivot before late-day buying mitigated losses.
Outlook for Wednesday, May 21, 2025
Bias: Mixed, with late-day buying providing some optimism despite the down day.
Economic Data: Only the Mortgage Applications Index is due, unlikely to move markets significantly.
Seasonality: Mixed, with the Dow negative and S&P 500/NASDAQ neutral to negative post-options expiration.
The 5900 level on the S&P 500 is acting as support after breaking prior resistance.
Trends to Monitor: Continued consolidation is ideal, but a pullback’s intensity will be critical. Growth-to-value and discretionary-to-staples ratios remain in downtrends but are above moving averages, hinting at potential trend reversal if sustained.
Conclusion: The market remains positive across short, intermediate, and long-term horizons but is declining from overbought levels. A sideways consolidation or mild pullback is hoped, with close attention to selling pressure and geopolitical developments.

PDF of Charts and Slides used in today's video: https://drive.google.com/file/d/1S0n-NuHsXHcV0xK2V6ShfxkOAgW6hZ8y/view?usp=sharing

My Exclusive Free Workshop: The Four P's of Building a Successful Investing Program → https://spxinvesting.mailchimpsites.com

Facebook Private Group:
https://www.facebook.com/groups/667271964721864

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!