InterMarket Analysis Monday December 1, 2025

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Summary of the Intermarket Analysis Video Update for Monday, Dec 1, 2025;
Overall Market Tone:
Strong rebound week: S&P 500 +3.7% from last Friday to this Friday, now within 1% of all-time highs.
Sentiment improving from extreme negative → positive on softer Fed comments hinting at a possible December rate cut.
However, leadership remains defensive → yellow flag (not red) on the sustainability of the rally.
Key Takeaway / Main Concern
The only major new change is renewed U.S. dollar strength: British pound just flipped into a downtrend (death cross) → moved to negative list.
Japanese yen already in downtrend.
Stronger dollar historically creates headwind for U.S. equities and risk assets.
Valuation:
Still extremely overvalued (trailing P/E way above red line, Shiller CAPE 40 level, forward P/E for S&P 22.4, Magnificent-7/Mega-8 even higher).
The markets continue to ignore valuation as long as price is rising — valuation is not a timing tool here.
Growth vs. Value (the biggest yellow flag):
Short-term: Value (defensive sectors, toilet paper/toothpaste) is outperforming growth.
Growth indices and growth/value ratios remain below 50-day MAs and are still trending down despite the strong week.
Negative divergence: S&P making new highs while growth/value ratio continues lower → market is rotating defensive even as price rises.
This pattern previously appeared late-2021 before the 2022 bear market, but it can persist for months.
Inflation:
No real inflation problem right now.
CRB weak, commodity trends mixed-to-down, market inflation expectations very calm.
Other Intermarket Highlights:
Commodities generally soft (oil, lumber, fertilizer down; copper up but not breaking out).
Gold and especially silver strong; silver just hit new all-time high.
10-year yield bounced but still in broader downtrend; bond market not signaling inflation or growth fears.
Junk bonds and riskier credit holding up well (positive). But watching some weakness.
Transports bouncing and trying to confirm, but still lagging longer-term.
Equal-weight S&P and broader indices improving faster than cap-weighted → breadth is good.
NASDAQ-100 and semiconductors bounced but still underperforming broader tech/growth indices longer-term.
Positive List (mostly unchanged):
Still strongly positive: most U.S. equity indices, healthcare (defensive leader), financials, junk bonds, copper, gold, silver, emerging markets trying to stabilize.
Negative / Watch List (new addition):
British pound vs. USD (new downtrend)
Japanese yen vs. USD (ongoing downtrend)
Bitcoin (short-term downtrend despite bounce)
Growth vs. Value ratios (short-term)
Mega-cap concentration still elevated
Conclusion:
The S&P 500 is overvalued and now showing defensive-leaning beneath the surface, while the only clear new risk is renewed dollar strength. The rally can easily continue (price is king and breadth is improving), but leadership is not offensive/growth-oriented, so caution is warranted. Needs to see growth stocks and growth/value ratios recapture leadership soon, or the yellow flag could turn red.

PDF of Slides:
https://drive.google.com/file/d/1JlmdfYEdcaNLNY9pQdFMv-JM_YiNHHLi/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!