Stock Market Outlook
For The Week Of March 23rd =
Downtrend

ADX Directional Indicators: Downtrend
Institutional Activity (Price & Volume): Mixed
On Balance Volume Indicator: Bullish

ANALYSIS

The stock market outlook remains in a downtrend, though the indicators improved and are on the verge of shifting back to an uptrend.

The S&P500 ( $SPX ) rose 0.5% last week.  The index is ~4% below the 50-day moving average and ~1% below the 200-day moving average.

SPX Technical Analysis - March 23 2025

Some improvement in the technical indicators last week.  First things first, the Average Directional Index ( ADX ) remains bearish.  The potential rally start from 3/14 remains intact, but we're still waiting for a follow-through day, which puts Institutional activity in mixed territory.  On-Balance Volume ( OBV ) moved back to bullish.

Energy ( $XLE ) outperformed other sectors for a second week in a row, one of the few that are bullish bias.  Staples, Materials, and Utilities ( $XLP, $XLB, $XLU ) were tied for worst performance.

Most sector styles were up last week, with high beta ( $SPHB ) leading and high dividend ( $SPHD ) lagging.  No changes in bias; risk-off styles are the only bullish areas, and even those returns are relatively small.

A decent week across asset classes last week, with Oil ( $USO ) leading to the upside. Bitcoin ( $IBIT ) was the worst performer.  No changes in the bias here either.

COMMENTARY

The FOMC chose to keep U.S. overnight interest rates unchanged, as expected. They noted uncertainty around the economic outlook, but still see rates down 0.5% by the end of the year.

This week provides us with the final edition of Q4 GDP figures ( no surprises expected there ), and February PCE.

Despite the improvement in market outlook signals, most of the sectors and styles remain bearish bias, and are overbought after last week.  Ideally, you'll want to see a) market leadership (e.g. IBD Innovators - $FFTY ) front running equities to the upside, and b) financials and technology support any change in the market outlook (i.e. move to bullish bias), due to their large institutional ownership.

The name of the game this week is hurry up and wait.  Until we see more shifts to bullish bias by sectors and styles, as well as breakouts by individual growth stocks, consider the recent move as a counter-trend bounce.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don't, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

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