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Stock Market Outlook
For The Week Of July 20th = Uptrend

INDICATORS

    ADX Directional Indicators: Uptrend
    Institutional Activity (Price & Volume): Uptrend
    On Balance Volume Indicator: Uptrend

ANALYSIS

The stock market outlook shows an uptrend for U.S. equities.

The S&P500 ( $SPX ) gained 0.6% last week.  The index sits ~5% above the 50-day moving average and ~7% above the 200-day moving average.

All three technical indicators remain bullish after a second week of consolidation.

Technical analysis of daily SPX prices

SPX Technical Analysis - July 20 2025

PERFORMANCE COMPARISONS

Tech ( $XLK ) outperformed last week; Energy ( $XLE ) was the worst sector, losing the prior week's gains.  Healthcare ( $XLV ) fell back to bearish bias, joining Consumer Staples.

Weekly price performance of S&P500 sector ETFs

S&P500 Sector Performance - July 20 2025

For sector styles, Large Cap Growth ( $IWF ) outperformed; Value underperformed, with Small caps down ( $IWN ) the most.  No changes in bias last week.

Weekly price performance by sector style

S&P500 Sector Style Performance - July 20 2025

As far as asset classes are concerned, equities ( $SPY ) were the best, while Oil ( $USO ) was the worst.  The most important event, macro-wise, was the U.S. Dollar moving to neutral bias.  Continued dollar strength would be the first step towards a shift in the macro environment ( i.e. which assets/sectors provide the best returns ).

Weekly price performance by asset class

Asset Class Performance - July 20 2025

COMMENTARY

June inflation data was mixed, retails sales were strong, and earnings season is off to a good start.

Headline and Core CPI increased in June, though the moves were not unexpected.

CPI (y/y) Actual Prior Expected
Headline +2.7% +2.4% +2.7%
Core +2.9% +2.8% +3.0%

Headline and Core PPI fell in June, although May data was revised higher again.

PPI (y/y) Actual Prior Expected
Headline +2.3% +2.7%* +2.7%
Core +2.6% +3.2%* +2.7%

A little more than 10% of the S&500 reported earnings last week, and most are exceeding forecasts. Those forecasts were lowered in response to tariffs, but still a good sign.

Federal Reserve Chairman Powell gives a speech before the market opens on Tuesday, so expect some volatility.  We'll also see existing home sales and the latest durable goods orders released during the week.

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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Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

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