Stock Market Outlook entering the Week of March 2nd = Downtrend
- ADX Directional Indicators: Downtrend
- Institutional Activity (Price & Volume): Downtrend
- On Balance Volume Indicator: Mixed
ANALYSIS
The stock market outlook changed to a downtrend last week after encountering heavy selling pressure, though Friday’s strong move could signal the start of a new rally.
The S&P500 ( $SPX ) fell 1.0% last week. The index is ~1% below the 50-day moving average and ~4% above the 200-day moving average.
SPX Price & Volume Chart for Mar 02 2025
The ADX remained bearish last week. Institutional activity moved to a downtrend, slipping below the 50-day moving average with a high level of institutional selling, since the index retreated to the 50-day. Friday’s intra-day rally off the low was impressive, marking the start of the next rally attempt. Starting Wednesday, look for a follow-through day to provide confirmation. On-balance volume also reflected the increase in selling during the week and shifted to mixed as it tests a long term average.
S&P Sector Performance for Week 09 of 2025
Financials ( $XLE ) were the best sector last week, and Technology ( $XLK ) led to the downside. Bias also shifted around, with Industrials reversing to neutral after 1 week, and Materials ( $XLB ) moving to bullish. Technology ( $XLK ) and index itself moved to bearish.
Sector Style Performance for Week 09 of 2025
Given the volatility last week, perhaps it’s no surprise that Low Beta ( $SPLV ) led to the upside and High Beta ( $SPHB ) to the downside. Mega-cap growth ( $OEF ) moved down to neutral bias, reflecting the weakness shown within large tech stocks, while Defensive’s ( $POWA ) moved up to neutral.
Asset Class Performance for Week 09 2025
U.S. Bonds outperformed again last week as rates declined. Bitcoin ( $IBIT ) led to the downside. U.S. equities and oil continued weakening, shifting from neutral bias to bearish bias.
COMMENTARY
A choppy week for some equity sectors and risk assets. Volatility, as measured by the volatility index ( $VIX ), broke into the 20s, after spending most of the month near 15. As a general rule of thumb, <20 = calm, 20-30 = choppy, >30 = crash (h/t Hedgeye).
Heading into Friday’s session, most short-term technical indicators showed oversold conditions, so the strong rally into the close wasn’t TOO unexpected. Look to see if we get follow through buying pressure later this week.
Of particular interest will be areas that held up well during recent market weakness (i.e. Consumer Staples, Financials, Healthcare, and Real Estate); do they continue to see inflows, or are they sold off for higher-beta names (i.e. Mag 7).
Nvidia ( $NVDA ) reported higher than expected sales and earnings for Q4. While that was higher than expectations, it was also the smallest beat in the past 2 years and reflects slowing growth, which is one reason the stock sold off.
January Durable Goods orders rose 3.1% month-over-month and 6.9% y/y, well above expectations and the highest level in 6 months. The second estimate of 4th quarter U.S. GDP remained steady at 2.3%. On the inflation front, January headline PCE inflation data fell slightly, while core improved 30 basis points from upwardly revised December data:
| PCE (y/y) | Actual | Prior |
Expected |
| Headline | +2.5% | +2.6% | +2.5% |
| Core | +2.6% | +2.9%* | +2.6% |
We’ll get revised ISM PMI data this week, along with February non-farm payrolls.
Best to Your Week!
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