EB Weekly Market Report - Monday, March 3, 2025

Tom Bowley - March 03, 2025

ChartLists Updated

The following ChartLists were updated over the weekend:

Strong Earnings (SECL) - last 70 or so have not been annotated, but should be over next day or two
Strong Future Earnings (SFECL)
Upcoming Earnings
Upcoming Earnings - Relative Strength

These ChartLists are available to download into your StockCharts Extra or Pro account, if you have a StockCharts membership. Otherwise, we can send you an Excel file with the stocks included in these ChartLists in order to download them into other platforms. If you have any questions, please reach out to us at "[email protected]".

The Raised Guidance (RGCL) and Bullish Trifecta (BTCL) ChartLists will be updated at the end of this week.

Weekly Market Recap

Major Indices

Sectors

Top 10 Industries Last Week

Bottom 10 Industries Last Week

Top 10 Stocks - S&P 500/NASDAQ 100

Bottom 10 Stocks - S&P 500/NASDAQ 100

Big Picture

The short-term cautious mood of the market really doesn't even show up on this Big Picture chart of the S&P 500. It's nothing more than noise for the long-term investor.

Sustainability Ratios

Here's the latest look at our key intraday ratios as we follow where the money is traveling on an INTRADAY basis (ignoring gaps):

QQQ:SPY

We're continuing to see weakness accelerate between the QQQ and SPY and that is NOT a good thing. This type of market behavior points to lower lows ahead. And check out that VIX below at 23.40 and rising. I can't stress enough how careful we need to be right now.

IWM:QQQ

The IWM moved just below key price support of 214-215 last Thursday. On Friday, we saw a temporary bounce, before new lows printed today. None of these indices look good at all. However, there is one silver lining on this chart. The IWM last week outperformed the QQQ, which aligns tightly with the market message being sent to the Fed - LOWER RATES!!!!!!!

In my opinion, the relative strength last week in the IWM:QQQ ratio is Wall Street's increasing belief that the Fed will shift again to cutting rates, rather than chasing the ghost of inflation. We'll find out in time.

XLY:XLP

UGLY. That's how I'd summarize this chart. Look at the S&P 500's final attempt at setting new all-time highs - and then what was happening beneath the surface. Money was rotating BIG TIME towards the safety of consumer staples as the S&P 500 set its final high. That's the kiss of death, as far as I'm concerned and now we're seeing the ramifications.

Sentiment

5-day SMA ($CPCE)

Sentiment indicators are contrarian indicators. When they show extreme bullishness, we need to be a bit cautious and when they show extreme pessimism, it could be time to become much more aggressive. Major market bottoms are carved out when pessimism is at its absolute highest level.

Last week, I discussed the possibility of a significant decline over the next 3-5 weeks, and we promptly saw the S&P 500 drop 5% before bouncing on Friday. After gapping higher this morning, however, there's been no follow through and money continues to rotate in very bearish fashion. Continue to be cautious.

We've had members write in and ask us to make the above chart clearer - in terms of what's bullish and what's bearish. Keep in mind that I usually highlight bullish developments with green and bearish developments with red. For instance, when the 5-day SMA of the CPCE moves above .75, that means retail options traders are bearish. But since that is a contrarian indicator, it actually means bearish options traders are bullish for the stock market. Hence, I use green arrows to highlight (1) the high CPCE readings, and (2) corresponding market bottoms. Complacent, or bullish, CPCE readings are identified with red arrows to highlight (1) the low CPCE readings, and (2) corresponding market tops.

I hope this helps to clarify sentiment a bit.

253-day SMA ($CPCE)

It looks like the 253-day SMA of the CPCE could be starting to hook a bit higher. If so, we will need to be patient short-term, while the increased volatility works its way through the stock market. We could be on the verge of a much larger drop on the S&P 500 (10% correction, possibly a bit more), given all of our technical, sentiment, and historical signals.

Volatility ($VIX)

Volatility is soaring, which means the selling we've seen the past week or two could accelerate even further. We'll also run the risk of significant selling at the opening bell in the days ahead, particularly if we receive any bad news at all on the economy or inflation. It could quickly escalate to ANY news is bad news. Here's the current view of the VIX:

Folks, this is extreme danger territory. It's a point where 5-6% losses on the S&P 500 could become a 10% loss overnight. The good news is that when the VIX tops and rolls over, the worst will likely be behind us. Of course, we'll want to confirm this based on market rotation and price action. But RIGHT NOW, it's extremely important for short-term traders to be careful. When the VIX is in the mid-20s and rising, rational trading behavior can be thrown right out the window. Technical trading rules like price support holding, or moving averages providing support, can and should be ignored.

Brace yourself.

Long-Term Trade Setup

Since beginning this Weekly Market Report in September 2023, I've discussed the long-term trade candidates below that I really like. Generally, these stocks have excellent long-term track records and many pay nice dividends that mostly grow every year. Only in very specific cases (exceptions) would I consider a long-term entry into a stock that has a poor or limited long-term track record and/or pays no dividends. Below is a quick recap of how I viewed their long-term technical conditions as of last week:

JPM - pulling back recently, but a well-deserved break after a very strong 2024
BA - improving, but only has 2-3 daily closes above 190 in last 11 months, so watch this key resistance level
FFIV - eliminated recent weekly negative divergence, but taking a breather
MA - remains near an all-time high
GS - difficult end to last week, but long-term trend remains very bullish
FDX - trending lower last couple months, I believe support in the 220-240 area will hold
AAPL - long-term uptrend is solid
CHRW - failed to sustain breakout above August 2022 high, hoping to see 95 support hold
JBHT - remains in lengthy consolidation period, has not closed below 150 in 4 years
STX - unable to clear resistance in 110-115 area, consolidating in bullish fashion
HSY - very strong rebound after brutal 6-month stretch where it dropped 30%
DIS - in uptrend, but won't get significant confirmation until it clears 120-125 range
MSCI - approached all-time high in December, but has backed off a bit
SBUX - very nice rally near all-time high since announcing new CEO from Chipotle (CMG)
KRE - in solid 21-month uptrend, but Fed's pausing of rate cuts having recent negative impact
ED - rallying back near all-time high, loves March, where it's risen 8 of last 9 years
AJG - continues one of most consistent and dependable uptrends, now at all-time high
NSC - still in long period (3+ years) of consolidation
RHI - weak in 2025, back to testing multi-year low near 60 level
ADM - recently hit 44.42, close to critical long-term price support in the 40-43 range; bouncing
BG - printing monthly hammer, so far holding 65-70 long-term price support
CVS - very nice bounce off 44-45 support to open its 2025 campaign
IPG - 3-year consolidation has stock at lower end of its 16-month 26-32 price range
HRL - still bound between price support at 27.50 and 20-month EMA resistance at 32.63
DE - still like the turn higher off its recent monthly PPO centerline test; uptrend in play

Keep in mind that our Weekly Market Reports favor those who are more interested in the long-term market picture. Therefore, the list of stocks above are stocks that we believe are safer (but nothing is ever 100% safe) to own with the long-term in mind. Nearly everything else we do at EarningsBeats.com favors short-term momentum trading, so I wanted to provide an explanation of what we're doing with this list and why it's different.

Also, please keep in mind that I'm not a Registered Investment Advisor (and neither is EarningsBeats.com nor any of its employees) and am only providing (mostly) what I believe to be solid dividend-paying stocks for the long-term. Companies periodically go through adjustments, new competition, restructuring, management changes, etc. that can have detrimental long-term impacts. The stock price nor the dividend is ever guaranteed. I simply point out interesting stock candidates for longer-term investors. Do your own due diligence and please consult with your financial advisor before making any purchases or sales of securities.

Looking Ahead

Upcoming Earnings

Q4 earnings are in full gear and many of the biggest growth names have either just reported or are getting ready to. The following list of companies is NOT a list of all companies scheduled to report quarterly earnings, however, just key reports, so please be sure to check for earnings dates of any companies that you own. Any company in BOLD represents a stock in one of our portfolios and the amount in parenthesis represents the market capitalization of each company listed:

Monday: OKTA ($15 billion)
Tuesday: CRWD ($94 billion), AZO ($58 billion), TGT ($56 billion), ROST ($46 billion)
Wednesday: MRVL ($76 billion), VEEV ($36 billion), ZS ($29 billion), MDB ($20 billion)
Thursday: AVGO ($927 billion), COST ($454 billion), KR ($46 billion), IOT ($27 billion)
Friday: None

Key Economic Reports

Monday: ISM manufacturing index, construction spending
Tuesday: None
Wednesday: February ADP employment report, ISM services index, factory orders
Thursday: Initial jobless claims, productivity & labor costs, wholesale inventories
Friday: February nonfarm payrolls

Historical Data

I'm a true stock market historian. I am absolutely PASSIONATE about studying stock market history to provide us more clues about likely stock market direction and potential sectors/industries/stocks to trade. While I don't use history as a primary indicator, I'm always very aware of it as a secondary indicator. I love it when history lines up with my technical signals, providing me much more confidence to make particular trades.

Below you'll find the next two weeks of historical data and tendencies across the 3 key indices that I follow most closely:

S&P 500 (since 1950)

Mar 3: +11.46%
Mar 4: +50.85%
Mar 5: +19.24%
Mar 6: -16.26%
Mar 7: -59.52%
Mar 8: +0.60%
Mar 9: -18.01%
Mar 10: +41.86%
Mar 11: +36.59%
Mar 12: -32.40%
Mar 13: +44.60%
Mar 14: -22.51%
Mar 15: +65.38%
Mar 16: +32.01%

NASDAQ (since 1971)

Mar 3: -7.22%
Mar 4: +76.37%
Mar 5: -13.69%
Mar 6: -22.48%
Mar 7: -53.60%
Mar 8: +7.66%
Mar 9: -39.99%
Mar 10: +42.11%
Mar 11: +28.82%
Mar 12: -82.06%
Mar 13: +116.54%
Mar 14: -27.83%
Mar 15: +3.76%
Mar 16: -8.26%

Russell 2000 (since 1987)

Mar 3: +4.06%
Mar 4: +96.06%
Mar 5: -41.35%
Mar 6: -43.62%
Mar 7: -24.83%
Mar 8: +13.71%
Mar 9: -76.04%
Mar 10: +10.07%
Mar 11: +11.23%
Mar 12: -78.21%
Mar 13: +92.54%
Mar 14: -60.62%
Mar 15: -22.48%
Mar 16: -89.92%

The S&P 500 data dates back to 1950, while the NASDAQ and Russell 2000 information date back to 1971 and 1987, respectively.

Final Thoughts

You can see how the market goes through phases. While stocks were holding up and attempting to set new highs, there appears to be nothing wrong. Of course, that's not how we felt, because of the many "under the surface" bearish signals that we could see. Now the market mood is shifting to a bit of panic as our major indices tumble today. Get ready for the "sky is falling" media to join in. That'll create the type of panic that will mark a significant bottom. Unfortunately, I don't feel we're close to that yet. Here are a few things to watch this week:

Rotation. We're now seeing the impact of all that Wall Street rotation. The big boys got out just in time. How convenient (sarcasm)!! I loathe the greedy bunch on Wall Street every bit as much as the current Fed's waffling.
Seasonality. It's March and that means we could see more weakness ahead.
Distribution. A week ago Friday, I mentioned how bearish the rotation from the XLY to the XLP was. Friday, February 21st was the 10th worst day of distribution between these 2 consumer sectors since March 2009. The 9 worst were all part of a bear market or a correction. Massive distribution from the XLY to the XLP doesn't happen before a surge in our major indices to new all-time highs. At least that's not been our history and I doubt it'll happen this time either.
The Economy. Are we heading for a recession? I don't know, but the bond market has been sending that potential message and now we're seeing the stock market doing the same. Hey Fed, are you listening?
Search for a Catalyst. In the past 2-3 weeks, I've been discussing what the next catalyst could be for the bulls? Well, in my opinion, we need the Fed to be convinced that inflation is under control and get back to cutting rates. Will they do it? The next Fed meeting is March 18-19, so we have two full weeks of market action before their policy statement. Does Fed Chief Powell and his cast of characters start sending different, more positive messages about inflation prior to that meeting? I think the stock market needs that to stave off the current bear attack.
Jobs Report. This could be a perfect example of ANY news is bad news. A weak report could suggest a recession ahead, while a strong report could suggest inflation remains a problem. The goldilocks scenario, if there is one, would be for nonfarm payrolls to show weakness, but remain positive.

Happy trading!

Tom