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  3. Stock Market Outlook - 2025-08-17
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Stock Market Outlook
For The Week Of August 17th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook continues to show an uptrend for U.S. equities, though institutional selling increased again.

The S&P500 ( $SPX ) rose 0.9%.  The index sits ~4% above the 50-day moving average and ~9% above the 200-day moving average.

The market added 2 more distribution days last week, bringing the total to 6 (which is elevated) and dropping the Institutional Activity signal to neutral.

Technical analysis of daily SPX prices

SPX Technical Analysis - August 17 2025

PERFORMANCE COMPARISONS

Health care ( $XLV ) led sectors higher, while Utilities and Consumer Staples ( $XLU & $XLP ) underperformed.  Materials and Healthcare ( $XLB & $XLV ) regained bullish bias and Energy ( $XLE ) rose to neutral.

Weekly price performance of S&P500 sector ETFs

S&P500 Sector Performance - August 17 2025

Small cap value ( $IWN ) outperformed the other styles, while Momentum and Low Beta ( $MTUM & $SPLV ) came away with small losses.

Weekly price performance by sector style

S&P500 Sector Style Performance - August 17 2025

Despite a choppy week, U.S. equities led assets higher, and Gold ( $GLD ) underperformed.  Gold is also testing bias levels, while the U.S. dollar fell back to bearish bias.

Weekly price performance by asset class

Asset Class Performance - August 17 2025

COMMENTARY

Last week's inflation data surprised too the upside; not good for those with hopes of large interest rate cuts.

Headline CPI was the "best" reading, showing now change in year over year readings.  Core CPI increased in July, and that's on top of an upward revision to June data ( from 2.8% to 2.9% ).

CPI (y/y) Actual Prior Expected
Headline +2.7% +2.7% +2.7%
Core +3.1% +2.9%* +3.0%

Headline and Core PPI showed sharper increases in inflation readings.  The headline data increased to 3.3%, on top of an upward revision to June data ( from 2.3% to 2.4% ).  Core was the worst, jumping more 1%.

PPI (y/y) Actual Prior Expected
Headline +3.3% +2.4%* +2.5%
Core +3.7% +2.6% +2.9%

Retail sales showed an increase of 3.9% year over year, down from June;s 4.4%.

And finally, the University of Michigan consumer sentiment survey dropped to 58.6, well below market expectations of 62, due to inflation concerns and higher prices for durable goods ( e.g. furniture, appliances, etc. ).

Data releases this week relate to housing, though all eyes and ears will be on Jackson Hole, Wyoming, for the U.S. Federal Reserve's annual symposium. Specifically, talking heads will try to assess any changes in the "tone" of Chair Powell’s speech on Friday.

The increase in institutional selling activity ( noted above ) coincides with other traditional technical measures showing an overbought market with bearish divergences developing (e.g. MACD, RSI, etc.).  While it's not time to panic, it is time to harvest some of those summer gains.

Asset class and sector bias has been volatile as of late, which aligns with the historical trend for August.  Not quite outright rotation, but there was definitely some flow shifts behind the scenes.  With seasonally weak September right around the corner, take a look at those allocations and make sure they still make sense.  Consider adding to positions that are still bullish bias, but oversold.

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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