What to Watch Update for Monday July 7, 2025

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What to Watch Video Update Summary (July 7, 2025)
Overview: The update analyzes market trends, focusing on whether the S&P 500 will continue hitting all-time highs, with insights categorized into positive, negative, and areas to watch.
Positive Charts:
Market Performance: S&P 500 sustains all-time highs, bolstered by a strong employment report, closing near highs with dips being bought.
Sentiment & Momentum: Fear and Greed Index at 78 shows optimism, not yet signaling reversal. Market interprets news bullishly.
Technical Indicators: S&P 500 above 20-day MA since April, with bullish breakouts. Growth slightly outperforms value; golden cross in growth-to-value ratio.
High Beta & Risk-On: High beta stocks and risk-on ratios are rising, supporting bullishness.
Advance-Decline Lines: S&P and NYSE price/volume lines at all-time highs, showing broad strength.
Smart Money Indicators: Accumulation distribution, Chaikin Money Flow, and momentum indicators are positive but nearing extremes.
Sector Performance: Semiconductors, financials, and broad indices (e.g., Wilshire 5000) hit highs. Tech-to-utilities and stocks-to-bonds ratios favor growth.
NASDAQ, Small/Mid-Caps: NASDAQ 100 at highs with golden cross; small/mid-caps breaking above 200-day MA.
Negative Charts:
Overbought Concerns: S&P 500 at +4 standard deviation; McClellan Oscillator, RSI 9/14, and Bullish Percent Index at extremes, suggesting consolidation/pullback risk.
Longer-Term Indicators: Special K oscillator bearish on daily chart; TTM Squeeze monthly chart declining since late 2024; Mass Index weekly chart signals potential reversal (needs confirmation).
Home Construction vs. Bonds: Negative but slightly improving, sensitive to interest rates.
Areas to Watch:
Employment: Strong report reduces July Fed rate cut odds; continuing claims at 1.96M, nearing 2M concern threshold.
Volume: Below average due to holiday but rising in late June/early July; summer volume trends monitored.
Interest Rates: 10-year yield at 4.35%, nearing 4.5% where stocks may react negatively.
Bond Ratios: Cash-to-bonds and TIPS-to-bonds show no major inflation concerns but monitored daily.
Yield Curve: 10-year to 3-month spread at zero, fluctuating, with recession risk if inverted.
Junk Bonds: Declining spread vs. government bonds indicates reduced fear.
Oil Prices: Dropped to mid-60s after geopolitical spike; requires monitoring.
Global Markets: German DAX lags S&P 500; rising US-to-German stocks ratio suggests US leadership.
Retail & Bellwethers: Retail underperforms; semiconductors, home builders, transports, and regional banks show strength.
Gold & International: Declining gold-to-S&P ratio; US stocks outperforming international markets.
US Dollar: At 96.99, weaker dollar supports markets, but oversold condition may lead to rebound, pressuring stocks.
Key Question: Will S&P 500 continue all-time highs?
Outlook: Strongly bullish with broad participation, but overbought conditions and mixed longer-term signals (e.g., Special K, TTM Squeeze) suggest caution. Potential slowdown, consolidation, or pullback likely, though no immediate reversal confirmed.

PDF of Slides: https://drive.google.com/file/d/1tWQ7SvQGa1oj5YAHVzykjir9RgljwRIL/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!