InterMarket Analysis Update for October 27-31, 2025

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The Intermarket Analysis video update, prepared for October 27, 2025, examines various markets and indicators to gain insights into the S&P 500's performance.
Key points include:
Market Overview: The S&P 500 is overvalued based on historical and forward-looking PE ratios, with the Robert Schiller PE at 40.58. Despite this, valuation hasn't been a reliable timing mechanism. Growth continues to outperform value, but recent trends suggest a potential shift toward defensive sectors.
Growth vs. Value: Growth stocks are in an uptrend but lack strong momentum, while value stocks show some strength, hinting at a defensive market posture. Small and mid-cap indices (S&P 600, S&P 400) are fairly priced compared to the overvalued S&P 500.
Inflation and Commodities: Inflation is not a major concern, with the recent CPI report viewed positively by the market. The CRB index and Baltic Dry Index suggest mild inflationary pressure, but commodities like corn, wheat, and lumber are in downtrends. Oil prices rose due to geopolitical factors, aiding market performance.
Other Assets: Gold and silver have been strong performers but recently saw profit-taking. The U.S. dollar is in a downtrend, supporting stock market gains, while the Japanese yen remains weak against the dollar. Copper is in an uptrend, signaling economic confidence.
Sectors and Indices: The tech sector and semiconductors are leading, with mega-cap growth stocks driving market gains. Financials and energy underperforming the S&P 500, raising concerns about underlying issues in financials. Utilities and healthcare show defensive characteristics.
Bonds and Yields: Bonds are underperforming stocks, with junk bonds performing well due to economic confidence. The 10-year yield has dropped to 4%, supporting small caps. Stock-to-bond correlations remain strong.
Market Breadth: The advance-decline lines for major indices are positive, but traditional Dow Theory shows non-confirmation as transports lag. The NASDAQ 100 and broader market indices like the Wilshire 5000 are hitting all-time highs.
Positive and Negative Factors: Most assets and indicators are positive, except for the U.S. dollar index and the Japanese yen against the dollar, which remain weak.
The analysis emphasizes long-term trends and subtle shifts, with no major changes in the broader market outlook. The market appears positive but with caution due to overvaluation and potential defensive shifts.

PDF of Slides:
https://drive.google.com/file/d/197_dHmet4EUItMPVSuXfgr7sfkgkjqJG/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!