Jul 5, 2025
BULL MARKET ANALYSIS
July Market Update
Preview
1) Indicators pointing to Bullish Expansion
2) Monetary Stimulus in the back half of 2025
3) Why is this not MAX-bullishness
The stock market breaking New Record Highs following a panic that happened just 60 days prior is a clear statement of optimism!
1-Breadth Expansion
The 200-day-average indicator is finally clearing the 50% level, meaning more than 50% of stocks are rising above their 200-day-moving average
2- Monetary Stimulus in the back Half of 2025
Monetary Stimulus failed to boost markets in the 1st half of the year, but I expect that to change for the 2nd half of 2025
We thought the trade war would push the economy into recession, prompting the Fed to cut, but the trade war de-escalated so quickly that it didn't impact the economy nearly as badly as expected.
The worst of the trade war is over, so the Fed should declare inflation transitory and likely telegraph a September cut in the July Meeting, which will boost market confidence and create a massive tailwind for rate-sensitive assets.
NO INFLATION
SLOWING EMPLOYMENT
We also see that Employment is slowing, and the Fed will want to get ahead of this before the end of the year. Remember, the Fed is more likely to cut when it's clear that inflation and employment are decelerating simultaneously.
THE MARKET IS NOT MAX BULLISHNESS YET
- Put/Call
- VIX
The Put/Call Ratio was lower in May and February, so even at record highs, investors haven't reached max bullishness. We are likely headed to 2021 levels before a major correction.
When the VIX consitencty holds below the long-term average (20) the S&P is likley start a slow grind higher. I would be Max bullish until the VIX falls to 12 or 13
Please email me for questions!!!
STAY BULLISH