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  3. Stock Market Outlook - 2025-08-10
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Stock Market Outlook
For The Week Of August 10th = Uptrend

INDICATORS

    ADX Directional Index: Uptrend
    Institutional Activity: Uptrend
    On Balance Volume: Uptrend

ANALYSIS

The stock market outlook continues to show an uptrend for U.S. equities.

The S&P500 ( $SPX ) rose 2.4%.  The index sits ~3% above the 50-day moving average and ~8% above the 200-day moving average.

The ADX directional indicator rejoins Institutional Activity and On-Balance Volume in bullish territory.  Distribution days ticked up heading into August; something to keep an eye.

Technical analysis of daily SPX prices

SPX Technical Analysis - August 03 2025

PERFORMANCE COMPARISONS

Consumer Discretionary ( $XLU ) led sectors higher, while Energy and Healthcare ( $XLE & $XLV ) underperformed.  Discretionary, Staples, and Financials ( $XLY, $XLP, $XLF ) returned to bullish bias; Materials ( $XLB ) eased back to Neutral and Energy ( $XLE )  fell to bearish.

Weekly price performance of S&P500 sector ETFs

S&P500 Sector Performance - August 10 2025

All sector styles gained last week; Mega Cap Growth ( $OEF ) led the charge and High Beta ( $SPHB ) brought up the rear.  Last weeks laggards ( $SPLV, $IWN, $IJJ, $IWX, $SPHD ) all regained bullish bias.

Weekly price performance by sector style

S&P500 Sector Style Performance - August 10 2025

In a reversal from the prior week, Oil ( $USO ) underperformed other assets and Bitcoin ( $IBIT ) outperformed. Oil also fell back to bearish bias.

Weekly price performance by asset class

Asset Class Performance - August 10 2025

COMMENTARY

Earning season is winding down and a majority of companies ( >80% ) beat their Q2 earnings estimates.  Most estimates were lowered in anticipation of tariffs, which were largely delayed until earlier month, so that feat is slightly less impressive than it first appears. The full impact of new tariffs likely hits Q4 earnings data. Year over year earnings growth in quarterly earnings is still positive though, which is good.

ISM Services PMI dropped to 50.1 in July, down from June's from 50.8 in June and below forecasts of 51.5. Within that data, the Services Prices Index rose to 69.9, the highest since October 2022. For reference, this sub-index measures the prices that service businesses are paying for inputs ( e.g. materials and services ), and is a key indicator of inflationary pressures in the services sector.

This week we get the latest CPI and PPI inflation data, along with retail sales and consumer sentiment.

Elsewhere, President Trump signed an executive order to expand Americans' access to alternative investments in their 401(k) retirement plans ( cryptocurrency, private equity, and real estate ). While a lot of ink was spilled about the impact on financial markets, keep in mind this is the federal government we're talking about, so changes could take years.

First, the SEC, U.S. Treasury, and Department of Labor need to rewrite the regulations that define what qualifies as a permissible 401(k) asset. Then 401k providers must provide new investment options within those rules.  And then employers add those options to their 401k plans.

Despite the bounce back by several sectors and styles, August is a seasonally weak period for U.S. equities, and another reason we raised some caution flags last week.  Since 1990, this time period has the highest rate of change in volatility, and the second worst monthly returns.  The worst monthly returns?  September. So don't be surprised if prices continue to chop around.  Take an extra moment to review your stop levels, max loss amounts, and profit targets for any new and/or existing positions.

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, TradingEconomics.com


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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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