Daily Update Podcast For Friday May 23, 2025

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Market Summary for Thursday, May 22, 2025. Outlook for Friday May 23, 2025
Market Performance: The SPX opened lower, fluctuated above and below the unchanged level, and briefly surpassed the daily pivot at 5871 before late-day selling led to a slight decline of 0.04%, closing virtually unchanged. Volume remained below average, consistent with recent trends, unlike the high volumes during April's declines.

Bond Market: The 10-year yield remains above 4.5% at 4.55%, raising concerns for stocks. The 30-year yield is at 5.06% after exceeding 5% on Wednesday.

Economic Indicators:

Jobless Claims: Initial claims were lower than expected at 227,000 (vs. 232,000 forecast), while continuing claims rose to 1.9 million, indicating stable and not deteriorating employment.

PMI: Global U.S. manufacturing PMI rose to 52.3 from 50.2, and services PMI increased to 52.3 from 50.8, signaling growth.

Existing Home Sales: Down 0.5% month-over-month to 4 million units annually, below the 4.15 million expected, and 2% lower than last year.

Economic Output: The Economic Output Composite Index showed a slight decline but no significant recessionary signals.

Market Sentiment and Technicals:

Sentiment remained positive at 66 but is trending lower. The VIX is at 20.28, indicating moderate volatility.

Short-term indicators showing mixed momentum, with the slope oscillator turning negative and others such as the stochastics declining. Intermediate-term indicators were also mixed, with some momentum oscillators such as the PMO and TTM squeeze turning negative.

The SPX remains above the 20, 50, and 200-day moving averages, keeping short, intermediate, and long-term trends positive, though the long-term trend is still a downtrend (50-day below 200-day).

Policy Developments: The House passed a reconciliation bill, raising the SALT deduction cap to $40,000, shifting Medicaid work requirements to 2029, and increasing the debt ceiling by $4 trillion. The Tax Foundation estimated a 0.6% GDP increase but a $3.3 trillion deficit rise over 10 years.

Sector Performance: Growth outperformed, with tech and discretionary sectors (e.g., NVIDIA, Microsoft, Amazon, Tesla) showing strength, while defensive sectors such as staples, healthcare, and utilities lagged. Financials weakened with a bearish MACD crossover.

Other Markets: The dollar briefly rose above 100 but closed below, remaining in a downtrend. Oil prices are nearing $60, unaffected by Middle East rumors. The equity risk premium remains low, and stocks appear overvalued based on forward P/E and inflation expectations.

Outlook for Friday, May 23, 2025:

Data: Only new home sales data (700,000 expected) is due, with no other major economic reports.

Geopolitical Risks: Always a potential escalation from Russia-Ukraine, India-Pakistan, or Middle East tensions.

Seasonality: Neutral to negative for Dow and NASDAQ, neutral to positive for S&P. The week after options expiration is up two-thirds of the time since 1980. Post-election seasonality suggests potential weakness before a month-end bounce.

Technical Outlook: The market remains positive across short, intermediate, and long-term horizons but shows signs of vulnerability due to declining momentum and continued overbought conditions. Convicted buying is needed to reverse the negative bias from Wednesday and Thursday’s declines.

Key Levels: Monitor the 10-year yield (needs to fall below 4.5% for stock support) and pivot points (updated on YouTube). The market is trendless in the intermediate term, with a negative bias due to recent down days.

The market stabilized somewhat but lacks conviction, with rising yields and mixed technical signals suggesting caution. The three-day Memorial weekend follows, with markets closed on Monday.

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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!