July 21, 2025
(THE STOCK MARKET IN SECOND-HALF 2025)
July 21, 2025
Hello everyone
WEEK AHEAD CALENDAR
MONDAY, JULY 21
10:00 a.m. Leading Indicators (June)
9:30 p.m. Australia RBA Minutes
Earnings: Steel Dynamics, Verizon Communications, Domino’s Pizza
TUESDAY, JULY 22
8:30 a.m. US Fed Powell Speech
10:00 a.m. Richmond Fed Index (July)
Earnings: Baker Hughes, Intuitive Surgical, Enphase Energy, Capital One Financial, Texas Instruments, EQT, Lockheed Martin, Sherwin-Williams, Philip Morris International, IQVIA Holdings, Coca-Cola, Haliburton, Quest Diagnostics, Pulte Group, KeyCorp, General Motors, D.R. Horton, Equifax, Danaher, RTX, Northrop Grumman
WEDNESDAY, JULY 23
10:00 a.m. Existing Home Sales (June)
Earnings: O’Reilly Automotive, ServiceNow, Chipotle Mexican Grill, T-Mobile US, United Rentals, Tesla, International Business Machines, Alphabet, Lamb Weston, Freeport McMoRan, General Dynamics, Lennox International, Hasbro, Boston Scientific, Thermo Fisher Scientific, Hilton Worldwide Holdings, AT&T, Otis Worldwide, NextEra Energy, GE Vernova, Raymond James Financial
THURSDAY, JULY 24
8:15 a.m. Euro Area Rate Decision
Previous: 2.0%
Forecast: 2.0%
8:30 a.m. Continuing Jobless Claims (07/12)
8:30 a.m. Initial Claims (07/19)
8:30 a.m. PMI Composite preliminary (July)
8:30 a.m. S&P PMI Manufacturing preliminary (July)
8:30 a.m. S&P PMI Services preliminary (July)
10:00 a.m. New Home Sales (June)
11:00 a.m. Kansas City Fed Manufacturing Index (July)
Earnings: Edwards Lifesciences, Deckers Outdoor, Intel Newmont, Ameriprise Financial, Union Pacific, Pool, Nasdaq, A.O. Smith, Valero Energy, West Pharmaceutical Services, Honeywell International, Dow, Westinghouse Air Brake Technologies, Textron, Tractor Supply, L3 Harris Technologies, Keurig Dr Pepper, CenterPoint Energy, Blackstone, Southwest Airlines
FRIDAY, JULY 25
8:30 a.m. Durable Orders preliminary (June)
Previous: 16.4%
Forecast: -11%
Earnings: HCA Healthcare, Phillips66, Charter Communication, Centene.
Will the record-setting run continue in the stock market?
Those in the bearish camp point toward weaker GDP, cracks in the job market, and inflation risks. Bullish investors think most of those risks were priced in during the spring sell-off, and the bar has been set low enough that anything less than disaster would be good enough to push forward revenue, earnings, and economic outlooks higher, rather than lower.
We must remember that stocks are forward-looking and are considered a leading, rather than lagging, indicator. The ability of stock prices to predict what may happen to the economy can look disorderly. A bit of stop and start here and there – a bit chaotic looking sometimes.
However, we know that the market can represent collective psychology, and this can be a valuable tool for economists and investors.
The predictive nature of markets is one reason behind the old Wall Street adage, “stocks climb a wall of worry.” Often, stocks bottom when everyone thinks the worst has yet to happen, and they top when everyone sees roses and daisies.
Over the past three months, the stock market has climbed a big wall of concern.
U.S. employers have announced over 696,000 layoffs through May, up 80% year over year, according to Challenger, Gray & Christmas. The unemployment rate has inched up to 4.1% in June from 3.4% in 2023. And inflation, while much lower than in 2022, when the Fed declared war on it by significantly raising interest rates, is still above the 2% level targeted by many, including the Fed.
The overarching landscape still suggests that stagflation, or even a recession, is a possibility. But so far, stocks indicate that the economy will side-step most damage.
Even though most are modelling lower rates over the coming year, which would help fuel economic activity, some analysts are not so confident about that outlook and are urging investors not to depend on the Fed stepping in to cut rates.
And let’s not forget the One Big Beautiful Bill Act, and its effects on the economy. It contains significant tax cuts, including new Social Security income tax breaks and a higher State and Local Tax deduction, which provide additional money to support spending and GDP.
Analysts who cut revenue and growth outlooks earlier in the year, may be increasing forecasts and potentially fuelling additional upside.
Arguably, those upward revisions could go a long way toward appeasing those concerned about the S&P 500’s valuation, given that the recent rally has inflated its price-to-earnings (P/E) ratio.
The S&P500 topped out in February when its forward price-to-earnings ratio eclipsed 22. It bottomed out when the P/E ratio reached about 19. The recent rally has again pushed the S&P 500’s P/E over 22, which historically doesn’t correspond with favourable one-year returns.
Carson Group’s Chief Strategist, Ryan Detrick, has updated their outlook. He has been bullish for a while.
Detrick’s optimism is partially rooted in history.
The strategist points out that since the early 1970’s, there have been five instances when the S&P 500 rose by 19% in 27 trading days like this year. Each time, the market was higher one year later, returning a median of 32.6%. Since 1950, the S&P500 has been up one year later 74% of the time, returning a median of 10.4%.
Detrick’s team writes, “This is still a young bull market.” The average bull market lasts 67 months, and this one has only lasted a little over 30 months so far.
The team goes on to say, “Like a cruise ship that is very hard to turn once it gets moving, bull markets tend to carry their momentum forward, another reason this once could last much longer than many think.”
Regarding valuation, the team believes there’s a bull case that a “low tariffs, big tax bill” environment will provide a catalyst for earnings, helping keep the P/E ratio in check.
If we are left with 15% tariffs, Detrick argues that “companies should be able to navigate the additional tariffs and maintain profit margins, especially larger companies with less fragile supply chains.”
Detrick acknowledges that 2025 has been a wild ride and that we should prepare for more ups and downs. Ultimately, he sees reasons to expect this bull market to continue.
Also in Detrick’s corner is hedge fund manager Bill Ackman, who manages Pershing Square, a hedge fund with $18 billion under management.
Ackman is bullish because he believes that the increase in money stashed in money market funds over the past year could make its way back into risk assets, propping up the stock market.
Let me give you an idea just how much is sitting in money market funds. As of July 10, the Investment Company Institute says $7.07 trillion is sitting in funds and that is up from $7.02 trillion on June 25.
Dan Ives is another bull, who is particularly bullish on technology. His current role is Wedbush Securities’ managing director and global head of technology research.
He argues, “The AI revolution is just hitting its next stage of growth from software to consumer to really the rest of the supply chain.” Ives believes potential numbers are being underestimated for the second half of the year.
Ives thinks that spending on AI will continue as more companies look to harness its power to shave costs from their system, using AI agents to increase efficiency and reduce labour costs.
Consequently, Ives thinks numbers can go a lot higher because of the spending, and because “we’re going to see 2 trillion of incremental spend over the next three years.
Ives argues that we could be looking at S&P potentially at 7,000.
MARKET UPDATE
S&P500
The index reached another new high – 6314 – on July 18. There is still no sign of a peak yet “pattern wise” – although many talking heads, analysts & experts are pounding the table about “bubbles”, stretched P/E’s, & overbought markets. And of course, we are hearing about the “crash” in the markets that is going to happen in the very near future. (When are we not hearing about that?) Let’s pin them down and ask when exactly that is going to happen? Can they answer that?
Yes, we have had a long run from the April low, and momentum is starting to slow, and even some technicals have turned bearish – (check daily MACD).
But, as I have outlined above, many other hedge-fund managers and strategists are still bullish.
So, to approach the markets with great respect, you could start taking some profits on your trades – you can either take all profits, take half off the table, or roll forward. (All depends on your risk tolerance). Most of those option spreads I sent out in early June are in the money now; you may have some time premium left, but it might be better to take some profit and roll it into another trade. (I have found if you don’t take your profits, the market will often take them from you). I am not one to leave it to option expiration. Nobody knows what is going to happen on August 1.
Jacquie’s Post Option Spreads:
(IWM 215/225 Dec. 2025 & 215/220 Dec. 2025),
(AMZN 210/220 Oct 17, 2025 & 215/225 Oct. 17, 2025),
(QQQ 545/555 Sept. 30, 2025 & 550/560 Nov. 21, 2025),
(VST 180/185 Sept.19 2025)
Support = 6200/10 & 6140/50
Resistance = 6385/10
GOLD
Gold is still the dingo strolling across the island landscape. This extended period of choppiness could still be viewed as part of a longer-term topping pattern that is still unfolding. Gold is potentially forming a rising wedge/reversal pattern and could even test the ceiling at $3470/75k before rolling over.
Support = $3285/90
Resistance = $3375/80
Silver is the metal that is moving now, and we have two option spreads to take advantage of the rally happening now. (SLV) 33/35 & 33/36.
BITCOIN
After its spike higher to 123k, the coin is consolidating. The market has broken above key resistance of 112/115k area; the upside pattern is not yet complete from the June low at 98.2k, so further upside is favoured.
Support = 112/115k area (a break below here would put the bullish view on hold)
Resistance = 122/123k area
HISTORY CORNER
On July 21
QI CORNER
DEEP DIVE
Bitcoin
Daily chart
I have drawn on this chart to show you what could happen between now and the end of the year/early next year.
Bitcoin could rally further before it retraces for a period. It could then rally again into year end. Possible target = ~$150/$155k.
And then, I’m afraid, after everybody has jumped into bitcoin – including institutions – bitcoin could take a “deep dive” down to around the $40k/$30k handle over a two-year period.
My suggestion: start taking your money off the table as the coin keeps making new highs.
And that goes for your holdings in MicroStrategy and IBIT. MicroStrategy could be hit very hard when bitcoin does turn lower.
It’s about making the profit, taking it off the table and then rotating into the next trade/stock/sector.
Leave some crumbs for someone else.
This bitcoin chart goes back to 2020 showing rallies and retracements and a long consolidation pattern from 2022 to early 2024. This long sideways movement provided the platform from which bitcoin has launched.
SOMETHING TO THINK ABOUT
Cheers
Jacquie
