Stock Market Outlook entering the Week of March 9th = Downtrend
- ADX Directional Indicators: Downtrend
- Institutional Activity (Price & Volume): Downtrend
- On Balance Volume Indicator: Downtrend
ANALYSIS
The stock market outlook remained in a downtrend last week after last week’s rally attempt failed. Equities get a second chance this week, thanks to another strong Friday rally.
The S&P500 ( $SPX ) fell 3.1% last week and tested the 200 day moving average. The index is ~4% below the 50-day moving average and ~1% above the 200-day moving average.
SPX Price & Volume Chart for Mar 09 2025
On-balance volume shifted to bearish last week, reflecting the high volume selling experienced since mid-February. Institutions weren’t in a buying mood last week either, instead using the 2/28 rally attempt as a exit opportunity. The market will try again this week, after putting in another strong Friday session. That said, the ADX shows a strengthening downtrend taking hold as we entered the weekend.
S&P Sector Performance for Week 10 of 2025
Healthcare ( $XLV ) was the only shelter from last week’s sell-off, basically breaking even. Financials ( $XLF ) were the worst sector. The bias for Energy ( $XLE ), Financials ( $XLF ), and Industrials ( $XLI ) fell to bearish. Communications, Materials ( $XLB ), and Utilities are testing their support levels.
Sector Style Performance for Week 10 of 2025
Like Healthcare, the High Dividend ( $SPHD ) sector style was the only winner last week. Mega-cap growth ( $OEF ), Momentum and Quality styles fell to bearish bias, while Large-cap value ( $IWX ) is testing support at a neutral bias.
Asset Class Performance for Week 10 2025
A bit of a comeback for Bitcoin; probably a response to all the crypto-related announcements out of Washington D.C. last week. Otherwise, Gold was the other safety play, while Oil led to the downside. The dollar also fell to bearish bias, thanks to an unusually large decline during the week.
COMMENTARY
First things first: the smart money is selling the rips, not buying the dips, which means U.S. equities are in sell mode. Whether it’s initial or reciprocal tariffs, government upheaval, or geopolitical turmoil, the world is an increasingly uncertain place at this moment in time. And financial markets do not react well to uncertainty, so you’re seeing risk-off trades.
Rising foreign currencies have pressured the U.S. Dollar in recent weeks, unwinding most of the post-election rally. Of greater interest is the bond market, specifically Germany’s: yields on government bonds have spiked after they announced changes to their “debt brake” and an historic boost in spending. The increase in bond yields comes despite the European Central Bank cutting interest rates for the fifth time in a row and lowering its growth forecasts for the Eurozone; likely an attempt to mitigate the impact of tariffs. These developments impact the profitability of various carry trades, changing capital flows and volatility throughout the global financial system.
January macroeconomic data ( ISM PMI Surveys ) showed slightly lower manufacturing activity and slightly higher service-related activity. February non-farm payrolls showed a month over month increased, but fell short of forecasts. At a speech in Chicago, Federal Reserve Chairman Powell stated that “the US economy continues to be in a good place,” and while they aren’t focused on the uncertainty caused by tariffs, they are waiting for more data to determine if and when interest rate adjustments are needed. So there’s no “Fed put” at the moment.
If you’re looking hold a position longer than a day or two, you want to buy the best of the best when you have the highest odds of success. Now is the time to prepare your watch lists for the next buying opportunity ( big up days with higher than average trading volumes, $VIX < 20, bullish bias, etc. ). There are only a few places with a bullish bias ( see above ), and their largely defensive in nature.
This week we get January JOLTs, February CPI & PPI, and March Consumer Sentiment.
Best to Your Week!
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