What to Watch Update for Tuesday September 2, 2025

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The "What to Watch" video update discusses current market trends for the S&P 500, categorized into positive, negative, and watchlist indicators, with a focus on whether the index can reclaim 6,500.
Here's a summary:
Positive Indicators:
The S&P 500 hit an all-time high above 6,500 on Thursday but fell slightly on Friday, closing at 6,460, just below the R1 pivot resistance at 6,468.
The S&P 500 is above key moving averages (20, 50, 100, 200 periods) on daily and weekly charts, signaling a positive trend.
The advance-decline line, accumulation-distribution, and Chaikin Money Flow & oscillator remain above moving averages, indicating positive market internals.
Discretionary sectors are outperforming staples, and financials are hitting all-time highs, suggesting strength.
Small caps and mid-caps show improvement, with recent golden crosses in the S&P 600 and Russell 2000.
Stocks-to-bonds ratios (e.g., S&P 1500 vs. short-term bonds) remain above moving averages, supporting a "soft landing" outlook.
Lower 10-year yields and a declining dollar are supportive of equities.
Negative Indicators:
Short-term weakness emerged on Friday, with growth underperforming value, as seen in intraday growth-to-value ratios and small/mid/large-cap growth-to-value ETFs dropping below moving averages.
The S&P McClellan Oscillator is slightly below zero, showing a negative divergence with lower highs despite the S&P’s rise.
Momentum oscillators (e.g., PMO, TSI, slope oscillator) are flat or declining, indicating lethargic momentum.
The bullish percent index for the S&P dropped below its moving average, signaling caution.
Volume remains below average, raising concerns about conviction, though an increase is anticipated post-Labor Day.
Watchlist Indicators:
The S&P is testing the R1 pivot (6,468) for the third week, with resistance unconfirmed until a Friday close above it.
Employment data (upcoming Friday) and weekly jobless claims (stable but with high continuing claims) are critical for Fed rate cut expectations.
The skew index remains elevated, suggesting the market anticipates a big move (direction unclear).
Defensive sectors (e.g., staples-to-tech ratio) show mixed signals, with no clear trend.
Ratios such as small caps vs. large caps, semis vs. tech, and high beta vs. low beta lack conviction, moving sideways.
Retail, home builders, and regional banks show improvement but were hit on Friday.
Gold is potentially breaking out, but the gold-to-S&P ratio is down, favoring stocks.
The dollar’s downtrend supports stocks, while international markets (e.g., German DAX) are stable but not breaking out.
Key Questions:
Will the S&P 500 break above the 6,468 resistance by Friday’s close?
Will volume pick up post-Labor Day, and will it reflect buying or selling?
Will September defy its historically negative trend, especially with Fed rate cut expectations?
Is the market shifting to a defensive posture, as suggested by short-term growth-to-value weakness?
The markets anticipate a Fed rate cut, supported by GDP growth and dovish FOMC comments, but short-term defensive signals and low volume warrant caution. The employment report on Friday will be pivotal.

PDF of Slides:
https://drive.google.com/file/d/1ahqPs8_bTYgWzQxslFtZ8W357hHQjHKx/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!