FORGOT TO ADD THE DASHBOARDS (added here)….
The following weekly report below provides a weekly and year-to-date performance overview of global indices, along with a summary of sentiment, technical indicators, and key economic data.
Market Summary: The stock market experienced significant fluctuations in the week of February 18, 2025, with record highs early in the week followed by a downturn due to profit-taking and valuation concerns. The S&P 500 hit a fresh record high of 6,147 in the first half of the week, driven by resilience to selling interest and the inclination to buy on any weakness. However, over the week growth concerns emerged following disappointing economic data, including a drop in the February S&P Global US Services PMI, a decline in existing home sales, and a drop in the University of Michigan Consumer Sentiment report. The S&P 600 small cap index closed -3.58%. For the week, the equally weighted S&P 500 (RSP) closed -0.70% vs. the market weighted S&P 500 (VOO) closed by -1.59%. On the other hand, the equal weighted technology (QQEW) closed -1.67% and the market weighted technology (QQQ) closed -2.24%. Mega cap and small cap stocks saw the largest declines, with the S&P 500 consumer discretionary and communication services sectors registering the largest declines among the eleven sectors. Defensive-oriented sectors like utilities, consumer staples, and health care were top performers.
Gold and Chinese equity markets closed higher, and the developed market closed lower. The German elections this week is a key driver for Europe closing lower. The US market was under pressure due to growth concerns and Treasury yields dropped to 4.43%.
From a portfolio perspective, added more KWEB (Chinese tech ETF). Last week, we wrote the KWEB is hidden gem with a play on Deepseek (Chinese AI play). Both CQQQ and KWEB are plays on the technology/Deepseek/unloved Chinese market. The portfolio is top heavy with Chinese and gold positions with remaining position focused on Europe. This type of portfolio is not for everyone and should not be copied with doing your own research. This is an aggressive portfolio and 20% of the other portfolio has US bonds (hoping to add both portfolios on the Substack).
The following is the weekly Index summary (see the table below):
S&P 500 Large Cap Index: -1.66%
Nasdaq Composite Index: -2.51%
S&P 600 Small Cap Index: -3.58%
VEA – Vanguard FTSE Developed Mkt. ETF: -0.52%
VWO – Vanguard FTSE Emerging Mkt. ETF: +1.13%
Technical and Sentiment Analysis: The technical signal turned from “Green” on Monday and turned “Red” on Friday. None of the sentiment indicators are in the extreme zone. Unless there are multiple distribution days the trend is positive or sidewards. It looks like the market participants are under impression that we have Trump Put in the market.
Economics and Other Events: Housing starts in January decreased by 9.8% month-over-month, reaching a seasonally adjusted annual rate of 1.37 million (consensus: 1.4 million), down from a revised 1.52 million (previously 1.5 million) in December. Meanwhile, building permits increased slightly by 0.1%, rising to a seasonally adjusted annual rate of 1.48 million (consensus: 1.45 million), up from a revised 1.48 million (previously 1.48 million) in December. A key takeaway from the report is the lack of growth in single-family housing starts and permits, which will exacerbate ongoing affordability issues in the existing home market, where inventory remains tight. Single-unit starts fell 8.4% month-over-month, and single-unit permits remained unchanged. The MBA Mortgage Index saw a decline of 6.6%, following a 2.3% increase the previous week. The Purchase Index dropped 5.9%, while the Refinance Index decreased by 7.3%.
The preliminary February S&P Global US Manufacturing PMI came in at 51.6, up from 51.2 in the previous month. The preliminary February S&P Global US Services PMI was 49.7, down from 52.9 in January. The existing home sales totaled 4.08 million in January, slightly above the consensus of 4.06 million, with the prior month's figure revised up to 4.29 million from 4.24 million. A key takeaway from the report is that existing home sales are being held back by affordability challenges, driven by high home prices—linked to limited inventory—and elevated mortgage rates.
The final February University of Michigan Consumer Sentiment reading came in at 64.7, below the consensus of 67.8, and down from 67.8 in the prior month. A key takeaway from the report is that the decline in sentiment was widespread across age, income, and wealth groups, and was primarily driven by concerns over upcoming price increases due to tariff actions.
Next Week: The key economic data for next week includes PCE inflation and a report on consumer confidence.
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