Intermarket Analysis Update June 9, 2025 – S&P 500 Overvalued. Sectors & Global Trends Revealed!

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Intermarket Analysis Video Update for June 9, 2025
This weekly video analyzes markets beyond the S&P 500 to gain insights into its performance, focusing on valuation, sector performance, growth vs. value, inflation, and correlations with other assets.
Valuation:
Historical P/E Ratio: Using a 10-20 scale (15 = fairly priced), the S&P 500 is overvalued, with a P/E above 20. A drop to 4,200 (from 6,000) would be needed to reach a non-expensive level, though this has been overvalued for years.
Shiller P/E Ratio: At 36.91, well above the historical median/mean of 16-17, indicating overvaluation.
Forward P/E: Mega Cap 8 (e.g., Apple, Nvidia) at 27.6, S&P 500 at 21.5, small caps at 15, mid-caps at 15.9. Smaller companies lag due to higher borrowing costs with rising interest rates.
Growth vs. Value:
Growth outperforming value, a positive sign for upward market trends. Growth ETFs and indexes show uptrends, while value is underperforming but stable.
Small and mid-cap growth is outperforming value, with potential golden crosses (shift from downtrend to uptrend) forming soon in key ratios.
Sector Analysis:
Overvalued Sectors: Staples, industrials, tech, and discretionary (impacted by Tesla’s 14% drop) have P/E ratios above 20.
Undervalued Sectors: Energy at 15 is the cheapest.
Performance: Communication and industrials outperforming the S&P 500; energy, real estate, and discretionary underperforming. Tech and semiconductors showing improvement but remain in downtrends.
Inflation and Commodities:
CRB Index: Above moving averages, suggesting potential inflationary pressure long-term.
Baltic Dry Index: Slight uptrend, indicating mild inflationary signals.
Inflation Expectations: Rolling over, suggesting no immediate inflation concerns.
Commodities: Aluminum, wheat, and oil in downtrends (not inflationary). Corn, lumber, and natural gas in uptrends but pulling back. Copper in a solid uptrend, positive for the economy.
Other Markets and Correlations:
Gold and Silver: Gold is sideways, silver in a stronger uptrend recently, outperforming gold. Gold outperforming oil and the S&P 500.
US Dollar: Weak, in a downtrend, with euro, yen, and pound outperforming.
Bonds: Total bond ETF in an uptrend, but yields (e.g., 10-year at 4.51%) raise concerns. Junk bonds (high-yield bonds) performing well, tracking stocks. Bond volatility is decreasing.
Stocks vs. Bonds: Stocks outperforming short-term and mid-term bonds, with improving ratios.
Stocks vs. Commodities: Stocks underperforming commodities in 2025 but starting to recover.
Indexes and ETFs:
Mega Caps and FANG Index: Outperforming, with FANG hitting an all-time high.
Small Caps and Mid-Caps: Choppy, underperforming the S&P 500 but showing some improvement.
Semiconductors and AI: In downtrends but improving, with semiconductors not yet breaking out.
Global Stocks: Outperforming US stocks in 2025, with emerging markets in an uptrend.
Positive Factors:
Copper, euro, pound, yen, CRB index, gold, silver, low volatility ETF, staples, bonds (total, high-yield, investment grade, junk, world), FANG index, high-leverage loans, emerging markets, and Bitcoin are in uptrends or improving.
Negative Factors:
Growth, value, mega caps, US dollar, corporate bonds, Dow Jones composite, tech, semiconductors, Dow, NASDAQ 100, NASDAQ, mid-caps, small caps, micro caps, NYSE composite, Wilshire 5000, total US stock ETF, and ARK ETF remain in downtrends, though many are improving.
Long-Term Trends:
NYSE and S&P 500 show improvement but momentum remains weak. Stocks-to-commodities and US-to-global stocks ratios continue to be in downtrends.
Conclusion: The S&P 500 is overvalued but supported by forward-looking earnings and current growth outperformance. Inflation signals are mixed, with commodities such as copper positive but others such as oil subdued. Mega caps and global stocks are driving strength, while small caps and certain sectors are lagging. Improving trends and possible golden crosses soon suggest cautious optimism, but higher 10 year yield and downtrends in key indexes warrant vigilance.

PDF of Slides: https://drive.google.com/file/d/1E3VEkZB4rT-n7SrPHObJV_HpJNNwu0hE/view?usp=sharing

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!