Stock Market Outlook for August 21, 2025
The yield on the S&P 500 Index is currently the lowest since the Tech-bubble in 2000/01, but this could bode well for bonds that are yielding over 300 basis points above equity counterparts.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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TD Active Preferred Share ETF (TSE:TPRF.TO) Seasonal Chart
iShares MSCI Japan Value ETF (NASD:EWJV) Seasonal Chart
BMO MSCI Canada Value Index ETF (TSE:ZVC.TO) Seasonal Chart
Cactus Inc. (NYSE:WHD) Seasonal Chart
Wyndham Hotels & Resorts, Inc. (NYSE:WH) Seasonal Chart
JPMorgan BetaBuilders Japan ETF (AMEX:BBJP) Seasonal Chart
VersaBank (TSE:VBNK.TO) Seasonal Chart
iShares Core MSCI International Developed Markets ETF (AMEX:IDEV) Seasonal Chart
iShares S&P U.S. Mid-Cap Index ETF (CAD-Hedged) (TSE:XMH.TO) Seasonal Chart
Starbucks Corp. (NASD:SBUX) Seasonal Chart
Templeton Dragon Fund (NYSE:TDF) Seasonal Chart
iShares Russell 2000 Value ETF (NYSE:IWN) Seasonal Chart
WisdomTree Japan Hedged Equity Fund (NYSE:DXJ) Seasonal Chart
First Asset Energy Giants Covered Call ETF (CAD Hedged) (TSE:NXF.TO) Seasonal Chart
Data I/O Corp. (NASD:DAIO) Seasonal Chart
Progress Software Corp. (NASD:PRGS) Seasonal Chart
Laramide Resources (TSE:LAM.TO) Seasonal Chart
United Airlines Holdings Inc. (NASD:UAL) Seasonal Chart
Albemarle Corp. (NYSE:ALB) Seasonal Chart
The Markets
Stocks continued to lose traction on Wednesday as traders shy away from the once beloved growth trade in the technology sector. The S&P 500 Index ended down by around a quarter of one percent, returning to levels around the 6400 level that has been suspected to act as a cap before the third quarter volatility takes hold. The 20-day moving average (6380) was pierced around the lows of the session, once again degrading the level of short-term support that has elevated prices off of their April lows. Momentum indicators are showing negative divergences versus price where lower-highs below July’s overbought extremes have been charted for RSI and MACD. The result gives strong evidence of buying exhaustion, once again lending itself to the onset of a digestion of prices aligning with the period of volatility for the equity market. As has been emphasized, this is the time to be on your toes given the well known volatile period that this time of year is notorious for. As equity markets destabilize from their summer strength, looking for opportunities to peel back risk in portfolios has become appropriate in order to mitigate the erratic moves that impacts stocks in the final months of the third quarter (August/September). The strategy remains to avoid being aggressive in risk (stocks) in the near-term, but take advantage of any volatility shocks (should they materialize) to increase the risk profile of portfolios ahead of the best six months of the year for stocks that gets underway in October. Our list of candidates in the market that are worthy to Accumulate or Avoid continues to be dialed in appropriately, keeping investors tuned into those segments of the market that are working according to our three-pronged approach incorporating seasonal, technical, and fundamental analysis.
Today, in our Market Outlook to subscribers, we discuss the following:
- Yield spread of bonds over stocks peaking around multi-decade highs
- The action we are taking in the Super Simple Seasonal Portfolio
- US Housing Starts and the preferred “building” play in this market
- Consumer Loan activity and the surge in activity for Home Equity Lines of Credit
Subscribers can look for this report in their inbox or by clicking on the following link and logging in: Market Outlook for August 21
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Sentiment on Wednesday, as gauged by the put-call ratio, ended slightly bullish at 0.87.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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