InterMarket Analysis Update for Monday July 28, 2025

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The Intermarket Analysis video update, prepared for July 28, 2025, examines factors influencing the S&P 500 by analyzing various markets and metrics. Key points include:
Valuation: The S&P 500 is historically overvalued, with current prices significantly above past earnings-based valuations (e.g., Robert Shiller’s CAPE ratio at 38.97, well above the median of 16-17). Forward-looking valuations also indicate overvaluation (S&P P/E at 22.4, above the cautionary threshold of 20).
Growth vs. Value: Growth stocks are outperforming value stocks, a positive market signal. Growth ETFs and indices are hitting all-time highs, while value indices lag, though both are in uptrends.
Inflation: Inflation is slightly concerning but under control. The CRB commodity index and inflation-to-deflation ratios are rising, suggesting potential inflationary pressure, but inflation expectations are easing.
Other Markets: Commodities including aluminum, corn, and wheat are in downtrends, while fertilizer, lumber, and copper are rising, indicating mixed inflationary signals. Oil is stable, and gold is sideways. The U.S. dollar is in a downtrend, while the euro and British pound are strengthening.
S&P 500 Sectors: Tech, discretionary, and industrials are strong, outperforming the S&P 500. Utilities are shifting toward growth due to AI and EV demand. Energy, real estate, staples, and healthcare are underperforming, with staples’ weakness indicating a less defensive market.
Indices and ETFs: The NASDAQ 100, NASDAQ, and NYSE are at all-time highs, with broad market participation. Small and mid-caps underperforming but showing improvement. Semiconductors and AI ETFs are strong but not at all-time highs, raising slight concerns about tech continued leadership.
Bonds and Yields: Bonds are underperforming stocks, with the 10-year yield below the critical 4.5% level. High-yield bonds are hitting all-time highs, reflecting risk appetite. Bond volatility is declining.
Correlations and Trends: Strong correlations exist between stocks, bonds, and yields. The S&P 500 and NASDAQ are inversely correlated with the dollar and yields, supporting market strength. Long-term trends show U.S. stocks outperforming globally, though momentum is slowing.
Positive List: Growth, value, copper, major currencies, gold, silver, tech, semiconductors, mega-caps, and most indices (e.g., NASDAQ, NYSE, Wilshire 5000) are in uptrends. High-leverage loans and emerging markets are also positive.
Negative List: The U.S. dollar, mid-caps, and small-caps are underperforming, though showing some improvement.
The market is broadly positive, with growth sectors leading and broad participation, but overvaluation and recent semiconductor underperformance warrant caution. Inflation and interest rates remain key risks.

PDF of Slides:
https://drive.google.com/file/d/1rpH74T3HzcqNWCLEJMAt2XH-BR-3tKGQ/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!