Stock Market Update: May 23, 2025

The market opened under pressure this morning following provocative posts on X. These posts threatened aggressive tariffs—50% on EU goods and 25% on Apple products. The initial gap down in equities attracted dip buyers. However, similar to yesterday, the session closed on a weak note, leaving traders with much to consider over the extended weekend.

Market Performance Overview

The S&P 500 (SPX) declined by 0.7%. The Nasdaq 100 (QQQ) fell by 0.9%, and the Russell 2000 (IWM) edged down by 0.3%.

Key Indices Reaction

Investors were cautious due to the looming tariff implications. Market participants monitored the situation closely, resulting in mixed reactions across major indices.

Economic Indicators

Away from stocks, the 10-year Treasury yield exhibited intraday volatility but settled lower at 4.51%. The U.S. Dollar Index (DXY) weakened to $99.12. On a brighter note, gold posted gains, and crude oil also closed higher.

Factors Influencing the Market

The combination of geopolitical tensions and domestic economic indicators shaped market sentiment today. This uncertainty is amplified by potential impacts on trade and corporate margins, especially for technology-heavy indices like QQQ, due to Apple's significant weighting.

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Bottom Line

The tariff threats amplified risk-off sentiment, contributing to the morning sell-off. While buyers stepped in to defend the gap, the lackluster close suggests lingering uncertainty. This uncertainty likely pertains to tariff impacts on global trade and corporate margins. We anticipate market pullbacks will be absorbed by hedge funds and institutional investors, driven by incrementally improved visibility into 2026.

Market Outlook

This optimism is fueled by expected tax cuts and deregulation. These changes are likely to enhance corporate profitability and stimulate investment activity. Our research indicates that equity markets have entered short-term overbought territory. This scenario increases the likelihood of near-term profit-taking and consolidation.

Upcoming Signals and Events

Our next W.D. Gann Cycle Pivot Date will be early next month. Specifically, on Tuesday, April 29, 2025, we have the IWM and RSP ETFs; these two are the most important indices to give buy signals. As of now, we have all five major indexes with buy signals generated from our proprietary algorithm.

On Monday, April 28, 2025, we had a buy signal generated from our proprietary algorithm for the Dow Jones ETF DIA on the daily chart. The market structure continues to improve with breadth thrusts confirming internal strength.

Technical Conditions and Indicators

Technical conditions suggest that while short-term upside could be capped, the path of least resistance remains higher. As of April 25, 2025, SPY, QQQ, and DIA have daily buy signals. Additionally, sector ETFs (XLK, AIQ, SMH, XLY) have also triggered buy signals.

Our indicators from April 24, 2025, show that VIX is bearish for equities, as are Bitcoin and Apple. Historically, cycle dates often coincide with significant inflection points in price action.

While the market will be closed on Saturday, we will monitor for a potential pivot either into Friday’s close or by Monday’s session. Weekly sell signals persist across all five major indexes, indicating ongoing volatility.

Conclusion

In conclusion, the market reacts to external pressures while internal dynamics continue to evolve. Traders and investors should remain vigilant and adapt their strategies to navigate these turbulent times.