Daily Update Podcast for Wednesday September 24, 2025

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Market Summary for Tuesday, September 23, 2025:
Outlook for Wednesday, September 24, 2025:
Tuesday's Market Action:
S&P 500 Performance: The S&P 500 ended the day down 0.55%, closing below the S1 pivot at 6662 after hitting an intraday all-time high at the open. The decline was driven by underperformance in mega-cap and growth stocks, which heavily influence the index.
Market Internals: Despite the S&P's decline, broader market internals showed resilience. The advance-decline line based on price and volume improved slightly, and new highs expanded, indicating underlying market strength.
Support Levels: The S&P 500 found short-term support at the 6650 level, a psychological and technical level, after breaching the daily pivot (6680) and S1 (6662).
Volume: Volume remained above average, suggesting healthy market participation.
Mega Caps and Growth: Mega-cap stocks (e.g., Amazon -3%, Nvidia -2.8%, Tesla -1.93%) and growth sectors (tech, communication, discretionary) underperformed, while defensive sectors (energy, real estate, utilities, staples) held up better.
Economic Data:
Second-quarter account balance was less negative than expected at -$251.3B (vs. forecast above -300B).
Manufacturing PMI (52) and Services PMI (53.9) showed expansion but weakened slightly from prior readings.
Fed Chair Powell's Comments: Powell noted that equity prices are "fairly highly valued," echoing concerns about overvaluation, reminiscent of Greenspan’s "irrational exuberance" in the late 1990s.
Interest Rates: The 10-year yield dropped slightly to 4.12%, providing some relief to equities.
Dollar: The U.S. dollar weakened, potentially supporting stock market stability.
Sentiment: Market sentiment cooled, dropping from 63 to 58, but remained positive with trends still upward.
Technical Indicators:
Short-Term: Momentum indicators such as CCI, Williams %R, and stochastics declined but remain positive. The S&P is still above the 20-period moving average, indicating a continued uptrend.
Intermediate-Term: The Chande Trend Meter and Money Flow declined but remain extreme, suggesting sustained bullishness. The S&P 500 remains far above the 50-period moving average.
Long-Term: The S&P is 10% above the 200-day simple moving average, a level that historically signals caution when too extended.
VIX and Correlations: The VIX rose slightly, and the S&P-VIX correlation remains a warning sign, hinting at potential short-term weakness. Volatility risk premium increased, reflecting growing market fear.
Overbought Conditions: The overbought/oversold composite hit 91.68, indicating extreme conditions, which could foreshadow a pullback.
Sector and Index Performance:
Sectors: Energy outperformed due to rising oil prices, while defensive sectors (real estate, utilities, staples) held up better than growth sectors (tech, communication, discretionary).
Seasonality and Valuation:
Seasonality: September is historically weak, particularly the second half, which is the worst-performing half-month since 1950. The week after options expiration also tends to be negative.
Valuation: The S&P’s P/E ratio is elevated at 23, with tech, industrials, and discretionary sectors above 30. Materials are on the border of being expensive, while other sectors remain relatively fairly priced.
Outlook for Wednesday, September 24, 2025:
Economic Data: MBA Mortgage Applications and New Home Sales are due, with limited expected market impact. Thursday’s data (jobless claims, GDP, durable goods) and Friday’s core PCE inflation report are more significant.
Technical Watchpoints: Monitor the 20-period moving average for signs of further declines. Negative divergences in the McClellan Oscillator (price-based) and summation index suggest caution, though volume-based indicators remain positive.
Seasonality: Wednesday’s seasonality is neutral to negative, with potential for continued weakness as September’s historical underperformance persists.
Conclusion:
The S&P 500 remains positive across all time frames, with the S&P above key moving averages and long-term support. However, Tuesday’s decline, driven by mega-cap and growth stock weakness, combined with overbought conditions and negative divergences, suggests caution.