EB Weekly Market Report - Monday, August 4, 2025

Tom Bowley - August 04, 2025

ChartLists/Spreadsheets Updated

The following ChartLists/Spreadsheets were updated over the weekend:

Strong Earnings (SECL)
Strong Future Earnings (SFECL)
Raised Guidance (RGCL)
Short Squeeze (SSCL)
Bullish Trifecta (BTCL)
Leading Stocks (LSCL)
Upcoming Earnings and Upcoming Earnings Relative Strength
Manipulation Spreadsheet

State of the Market

This won't be a regular feature, but I feel the character of the market changed this past week, so I wanted to share a few thoughts with all of our members. In our Thursday Daily Market Report (DMR), I pointed out that I was growing much more cautious and that I was personally moving much more to cash. Simply put, I saw risks increasing. I certainly couldn't guarantee we would see a selloff like we saw on Friday, but the risks were definitely on the rise. Here are a few reasons why I grew more cautious:

Traders' inability to carry prices higher during the past few trading sessions (closes below opens)
Overbought conditions
Negative divergence combined with Thursday's big reversal on huge earnings news (META, MSFT)
Heavy volume accompanied Thursday's reversal
S&P 500's rally sent the index higher to test the upper channel line
Massive rally off April low

I want to show you a 50-year chart that highlights the historical significance of this latest rally:

The bottom panel is a 77-day rate of change (ROC) that captures the S&P 500's gain from its low close on April 8th to its close on July 30th, the day that Meta Platform (META) and Microsoft (MSFT) reported their blowout quarterly results. It was the 6th largest 77-day gain in the past 50 years. Folks, we have to have perspective. The stock market only goes up 9%, on average, every year since 1950. After you experience a gain of this magnitude, we should expect a retreat of some sort or at least a period of consolidation. Should the market continue to weaken, we will be faced with all types of media headlines spelling doom and gloom ahead. IGNORE IT.

Wall Street rarely is surprised. The big Wall Street firms protected themselves from a bear market during the November through February period, rotating from growth-oriented stocks to value-oriented stocks. That's the signal that we need to be fearful of. This latest top in the market bears none of those characteristics. Any downside ahead will be short-lived, in my opinion. It doesn't mean it won't hurt along the way, but I am NOT seeing signs of long-term worry. Short-term trading will be dicey and August and September are not the best months to try to triple your returns with leveraged ETFs. I might trade in and out of them on occasion, when the short-term time appears appropriate, but by and large, I'd stay away from them until we move into the more favorable Q4 period.

Fed Chief Powell has done us no favors and he has done the economy no favors. He's hyper-focused on inflationary concerns. Some of you may feel that's appropriate. I do not. I am not making this political. I never have and I never will. I didn't like Powell when Biden was in the White House and I don't like him with Trump in the White House. He has a history of acting late and it's sent U.S. stocks spiraling lower on more than one occasion. His latest stubbornness to cut interest rates may trigger another late-summer selloff and, based on the July jobs report, may result in more economic weakness ahead. The revised jobs numbers from May and June, which were lowered substantially, suggest an economy on much weaker ground than most of us imagined.

I'll be very surprised if the S&P 500 simply puts its head down and moves back up to fresh all-time highs next week. Anything is possible, but I don't believe that's the highest probability. I believe investing/trading success is heavily influenced by risk management. There's a time to be aggressive and a time to be defensive. After last week's trading, it's time to understand that stock market risks are now elevated. Personally, I'll use short-term strength to hopefully take profits on positions I'm still holding.

The growth to value ratios remain quite strong, which is why I believe any short-term market issues will be just that.....short-term. Take a look at this chart of the S&P 500 with two of my favorite growth vs. value ratios in the two panels beneath the price action:

Do you see the difference? Prior to the cyclical bear market that started in February, Wall Street was rotating OUT of growth stocks. At the most recent top last week, Wall Street continued to BUY growth over value as the ratio moved to new highs. I'm sorry, but that doesn't look like a major top to me. We may struggle for awhile, but I'm fully convinced we'll have a very strong Q4 and more all-time record highs ahead for U.S. stocks.

One other thing I'd like to mention. I cannot recall our Raised Guidance ChartList (RGCL) ever having as many stocks on it as it does right now. The number of high-growth technology companies on this list is very likely the highest it's ever been. So while the media may have a field day in the weeks ahead with its bearish forecasts and headlines, just understand that the TRUTH remains quite bullish. Selfishly, I'm almost hoping that we see another 10% correction. I don't think we will, but it sure would set up Q4 nicely. I believe selling ultimately will be capped off in the 5-7% range. 6144 was the all-time high in February and that should serve as key price support. Psychologically, 6000 will offer up solid support. My guess is that our ultimate summer bottom is somewhere in that range.

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

I've grown a bit more cautious near-term, but I am still a BIG believer in the current secular bull market and its ability to move higher in time. From a long-term perspective, trying to time ins and outs based on possible short-term weakness makes little sense. What if I'm wrong and stocks continue to push higher and you've moved to the sidelines as a long-term investor? Where do you get back in? I believe long-term investors should remain fully invested unless we have signals that are suggesting a significant decline ahead. I don't see such signals right now.

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

The upper panel continues to show deterioration in the QQQ:SPY ratio, if we ignore gaps. Clearly, the higher gaps have been favoring the QQQ over the SPY, but intraday action tells a different story as money is rotating a bit more towards value. Quite honestly, I'd expect to see that as we move throughout the summer months.

IWM:QQQ

The IWM channel throughout the May-July time period was broken last week. It doesn't mean the IWM rally is over, but it does suggest a pause in the bullish pattern. My best guess is that we'll see much more consolidation, and possibly more selling as summer winds down. Today is the 3rd day in a row, however, where we've seen intraday rotation favoring the IWM over the QQQ. I wouldn't yet call it bullish, but it is something I'll keep watching.

XLY:XLP

I still love this chart. The overall trend in all 3 panels clearly remains higher. The short-term rolling over of this ratio does indicate that we could see more stock market weakness and/or consolidation ahead.

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.

Keep in mind that the above 5-day SMA reading of the CPCE is our "speed boat" sentiment indicator that changes quite frequently. I wouldn't exactly say that the stock market has become overly pessimistic, but the 5-day CPCE has reached .67, its highest level in over 3 months. A 5-day reading at .75 or higher typically helps to mark key stock market bottoms.

253-day SMA ($CPCE)

This longer-term 253-day SMA of the CPCE is our "ocean-liner" signal, unlike our short-term speedboat indicator. This one usually provides us a very solid long-term signal as the overall market environment moves from one of pessimism to complacency and vice versa. Look at the above chart. When the 253-day SMA is moving lower like it is now, it accompanies our most bullish S&P 500 moves. I cannot think about being long-term bearish while this 253-day SMA keeps falling. Could we have a late-summer drift lower? Sure, but I doubt we're going to see any type of major selloff.

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 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 these stocks look as of two weeks ago:

JPM - long-term overbought, but continuing to push higher into all-time high territory
BA - substantial improvement continues, I could see this rally continue to 265-280 area
FFIV - again challenging all-time high
MA - very steady and bullish long-term performer
GS - June turned out to be a HUGE month as GS broke back out to all-time highs
FDX - recently failed again beneath falling 20-week EMA
AAPL - monthly RSI bouncing off 50 as I discussed last time; seems to be back in uptrend mode
CHRW - 85-90 is solid longer-term support and it's held that level in 2025
JBHT - would like to see 120-125 support hold and it has, now must negotiate overhead 20-week EMA
STX - long-term breakout in May has sent stock soaring
HSY - strength today has it against key resistance from 175-180
DIS - threatening major multi-year resistance level near 125; a close above would be very bullish
MSCI - 3 1/2 year consolidation still in play; 654 is the ultimate resistance and breakout level
SBUX - remains squarely in the middle of a wide consolidation range between roughly 70 and 115
KRE - looking for a long-term breakout above 70, trending higher for now
ED - successfully tested its rising 20-month EMA in both June and July
AJG - approaching a rare 20-month EMA test, which has provided great support since 2010
NSC - is this the breakout of a multi-year cup with handle pattern? if so, measurement is 360
RHI - still no sign of bottom, but management recently raised its dividend, showing great confidence
ADM - nice reversal off 43 price support, but now trying to clear its declining 20-week EMA
BG - remains in a wide 65-75 support zone, another trying to clear its declining 20-week EMA
CVS - looks like failed attempt to clear 50-month SMA, rolling over; major support at 43
IPG - 22.50 support continues to hold - at least for now
HRL - the last 18 months have been spent in a fairly narrow 27-35 range
DE - still looks very bullish from a long-term perspective (and short-term for that matter)

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 explain 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. Neither the stock price nor the dividend is ever guaranteed. I simply point out interesting stock candidates for longer-term investors. Do your due diligence and please consult with your financial advisor before making any purchases or sales of securities.

Looking Ahead

Upcoming Earnings

Very few companies will report quarterly results until mid-April. 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: PLTR ($374 billion), MELI ($120 billion), VRTX ($117 billion), AXON ($59 billion)
Tuesday: AMD ($286 billion), CAT ($206 billion), AMGN ($159 billion), ANET ($155 billion)
Wednesday: MCD ($215 billion), DIS ($214 billion), UBER ($184 billion), SHOP ($159 billion)
Thursday: LLY ($701 billion), GILD ($140 billion), VST ($71 billion), DDOG ($48 billion)
Friday: None

Key Economic Reports

Monday: June factory orders
Tuesday: July PMI composite, July ISM services
Wednesday: None
Thursday: Initial jobless claims, Q2 productivity & costs, June wholesale inventories
Friday: None

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 with much more confidence to make particular trades.

Below you'll find the next two weeks of historical data and tendencies across the three key indices that I follow most closely. The percentage for each calendar day represents the annualized return for that day. An example of how this is calculated is reflected next to the first day under the S&P 500 and in parenthesis:

S&P 500 (since 1950)

Aug 4: -63.32% (Ex: cumulative gains = -13.26% over 53 trading days. -13.26% x 253/53 = -63.32%)
Aug 5: -45.81%
Aug 6: +8.39%
Aug 7: +58.80%
Aug 8: -7.13%
Aug 9: -10.48%
Aug 10: -34.27%
Aug 11: +43.86%
Aug 12: -0.41%
Aug 13: +8.61%
Aug 14: +1.21%
Aug 15: +9.10%
Aug 16: +20.23%
Aug 17: +48.47%

NASDAQ (since 1971)

Aug 4: -86.61%
Aug 5: -86.71%
Aug 6: +34.04%
Aug 7: +67.85%
Aug 8: -19.33%
Aug 9: +2.58%
Aug 10: -55.12%
Aug 11: +29.15%
Aug 12: +40.76%
Aug 13: +29.10%
Aug 14: +35.43%
Aug 15: -0.04%
Aug 16: +33.28%
Aug 17: +22.01%

Russell 2000 (since 1987)

Aug 4: -108.90%
Aug 5: -98.23%
Aug 6: +1.40%
Aug 7: +62.31%
Aug 8: +6.52%
Aug 9: +12.38%
Aug 10: -58.63%
Aug 11: +27.28%
Aug 12: +16.16%
Aug 13: -33.46%
Aug 14: +24.05%
Aug 15: +15.38%
Aug 16: +54.99%
Aug 17: -18.35%

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

I remain long-term bullish, I want to be clear about that. Any talk about a pullback or a period of consolidation is nothing more than an understanding that short-term risks are a bit higher now.

We're definitely in a much different spot this week than we were one week ago. Last week, there was plenty of upside momentum and plenty of economic and earnings reports on tap. This week, it's the opposite. The S&P 500 hit the brakes hard as the reversal from Thursday morning's gap up accelerated into Friday after a much-weaker-than-expected jobs report for July. There'll still be plenty of earnings reports out, but the number of market-moving earnings reports will begin to dwindle. We're bouncing a bit so far today, but will it have staying power? Much of today's strength was found in the opening half hour.

Here are a few things I'll be watching this week:

Earnings. Now that the Mag 7 (except for NVDA) have reported quarterly results, we'll turn our attention to the next tier of key earnings reports this week, including Palantir (PLTR) today after the close and Advanced Micro Devices (AMD) and Arista Networks (ANET) after the close on Tuesday.
Interest Rates. The Fed has come and gone (thankfully!) and once again left stock market participants unhappy and disappointed. The 10-year treasury yield ($TNX) saw a huge drop on Friday after an opening move higher and there remains downward pressure on the TNX today. With little signs of inflation and a very weak jobs market, it's hard to imagine the TNX moving higher. Today marked a 3-month low on the TNX.
Technicals. Our major indices ALL closed beneath their respective 20-day EMAs and a couple tested their 50-day SMA. Today, we're rallying. So, in the very near-term, the Thursday open is our key price resistance, while our Friday close is our short-term support (along with our key moving averages).

Happy trading!

Tom