Weekly Market Analysis: Recap and Forecast. The Week of July 7, 2025

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For the week ending July 3, 2025, all three major U.S. stock indexes finished higher, buoyed by a strong June jobs report and optimism around trade deals and fiscal policy. We also noticed that the Russell 2000 IWM finally broke through its 200sma resistance, finished the week 3.5% higher, beaten the S&P 500, Nasdaq, and the Dow which gained 0.83%, 1.02%, and 0.77% respectively. These gains came during a shortened trading week, with markets closed on July 4 for Independence Day. 
 
What happened:
* After a tumultuous start to the year due to Trump’s proposed tariffs, U.S. stock markets—especially the S&P 500 and Nasdaq—have rebounded and reached new record highs as of Thursday’s close.

* A 90-day pause on tariffs and improving relations between the U.S. and China have helped soothe investor nerves.

*Economic indicators like job growth and the prospect of interest-rate cuts have further bolstered investor confidence.
 
* Congress has passed a major fiscal bill with tax cuts and spending, adding more fuel to the stock market’s optimism.


Despite the rally, concerns linger:
*The fiscal legislation is projected to add $3.4 trillion to the national debt.
 
* Tariffs may return in force after the pause ends, potentially slowing economic growth.

* Some strategists believe investors are overly optimistic and stock valuations may be stretched.

*Sector performance is uneven, with some areas potentially overvalued and others more promising.


What Question is being asked now?
Will the current economic momentum and policy environment sustain market growth, or are investors ignoring serious risks like deficits and looming tariffs?
 
 Answer
* Many investors remain bullish, citing historical trends and expecting continued gains, especially if trade negotiations succeed and stimulus measures boost growth.
 
* A “Goldilocks” Setup for the Second Half of 2025, investors are encouraged by: Potential trade deals, extension of the 2017 tax cuts, calmer geopolitical tensions, a Fed leaning toward interest-rate cuts. These factors create a “just right” environment for continued market growth, according to some Wallstreet experts.
 
* However, others urge caution, recommending portfolio adjustments and warning that tariffs and deficits could dampen growth and increase volatility.


Markets are riding a wave of optimism fueled by policy momentum, strong jobs data, and easing trade tensions. But with deficits rising and tariffs still looming, it may be wise to stay nimble by rebalancing into sectors with stronger fundamentals and preparing for potential volatility ahead.
 
Last week, $SPY went above its $615 range resistance and traded to $620 and $625. Similarly, $QQQ held its 545-$550 range and traded to $555-$556. Currently, $SPY is in $620-$625 range. Over $626.30, look to trade to $629-$630 and possible $635. If $SPY fail to hold $619, look to trade back down to $615 and $610 and possible $606-$605. $QQQ is currently in $550-$555 range. Over $556, look to trade $QQQ to $559-$562 then $565-$566. If $QQQ fails to hold $549, look to trade to $545-$544, then $541-$540-$538. In addition, $IWM is now in $220 to $224 range. Over $225 to $228-$230. Under $219.50 to $217 and $216-$215.
 
This week, there’s not much on the economic calendar besides Consumer Credit, FOMC May’s meeting minutes, and weekly Initial Jobless Claim. Investors may turn attention to the Trade Deals-Tariff Pause deadlines July 9, investor’s reaction to the one big-b-bill and Fed’s hint of rate cut. We will focus on following the market trend of sectors’ rotation and capture those gains this week, with possible trades on the mid-caps as well. Hope all had a wonderful 4th of July weekend and a profitable 1st half of the year. Looking forward to more robust gains in the 2nd half. Namaste!!