0:00 – Call Introduction
Ed O’Dowd kicks off the February CAPIS Monthly Research Briefing, welcoming clients and introducing Katie Stockton of Fairlead Strategies.
1:04 – Market Neutrality and Expected Volatility
Katie notes that despite the market appearing neutral, significant volatility is likely ahead. She reiterates her previous outlook that 2025 will be a range-bound year, characterized by choppy market conditions rather than a sustained bull or bear cycle.
2:35 – S&P 500 Analysis: Short- and Intermediate-Term Outlook for Equities
Katie analyzes the S&P 500’s current uptrend, explaining that it has reached its measured move projection and now signals overbought conditions. She highlights DeMark sell signals and deteriorating momentum, suggesting that the index is primed for a consolidation phase rather than a major downturn. If the S&P breaks above 6,100, Katie would reconsider her bearish short-term stance. However, current indicators suggest that a pullback or sideways trading period is more likely.
7:30 – Nasdaq 100 Analysis: Mega Cap Performance
The Nasdaq 100 (QQQ) also shows signs of trend exhaustion. Katie names some mega-cap stocks that have lost leadership, leading to a shift in market dynamics. While breadth has kept the market afloat, she warns that a loss of participation could result in greater downside risk.
8:39 – Small-Cap Stocks & Sector Rotation
Katie reviews small-cap stocks (IWM), emphasizing their long-term resistance levels. While relative strength has slightly improved, she is not convinced that small caps will outperform large caps. Sector rotation into defensive names like utilities, healthcare, and real estate suggests investors are adopting a cautious approach.
9:54 – Market Breadth and Participation
Katie examines market breadth indicators, noting a recent downturn. While breadth was strong in 2024, current weakness could make the market more fragile to the downside, especially with mega-cap stocks no longer leading.
10:44 – Volatility Index (VIX) and Sentiment Signals
Despite recent market complacency, the VIX remains within a broad range, indicating room for volatility to expand. Katie suggests that increased bearish sentiment could create a tradable low but notes that more downside pressure may be needed before reaching a buying opportunity.
14:14 – International Markets Performance
Katie analyzes international equities, pointing out strong performance in European markets (DAX, STOXX 600) but weakness in Japan. China’s FXI ETF shows a possible double-bottom formation, suggesting a longer-term investment opportunity, though she advises waiting for a pullback to enter.
18:00 – Sector & Stock Picks
Healthcare and Energy show short-term strength, but longer-term signals are mixed. Katie names some cyclical stocks that are showing early signs of bottoming. She highlights a MAANG stock that remains strong, with no sell signals despite extended gains.
23:34 – Commodities Analysis
● Crude Oil: Watching for a potential breakout above $75–$76 per barrel, which could benefit energy stocks.
● Gold & Silver: Bullish on precious metals, forecasting $3,060 for gold with silver likely to outperform in the near term.
● Copper & Agriculture: Recent breakouts in copper and agricultural commodities (DBA ETF) indicate strong momentum in these sectors.
25:10 – U.S. Dollar and Treasury Yields Outlook
● Dollar Index (DXY): Recent breakout suggests a long-term bullish outlook, but short-term consolidation is expected.
● 10-Year Treasury Yields: Expecting yields to rise to 5.0–5.25%, which could pressure equities but support defensive positioning.
35:30 – Q&A Session
Katie discusses how to identify a market bottom, emphasizing the importance of indicators like the stochastic oscillator and market internals. She advises waiting for a broad-based correction across all stocks before deploying capital aggressively. She also shares insights on how her firm dynamically shifts between risk-on and risk-off sectors, using a tactical ETF strategy that limits drawdowns and maximizes long-term returns.
46:36 – Closing Remarks
Ed O’Dowd thanks Katie for her insights and announces that next month’s briefing will feature Gustavo Cano of Fund@mental on March 20th.
If you are interested in viewing the recording and getting all the insights, reach out to your CAPIS sales representative or [email protected]
