Bullish in the Intermediate-Term: Technical Assessment

As we navigate the dynamic landscape of the stock market, it's crucial to stay informed about the prevailing trends to make well-informed investment decisions. In this article, we'll delve into the technical indicators that support a bullish intermediate-term outlook and explore the potential catalysts for a sustained bullish trend in the coming months.



1. Moving Averages (MA) Crossover: The 20-EMA crossing above the 50-EMA on a daily chart is a strong indicator of a bullish intermediate-term trend. This crossover signals that the shorter-term moving average (20-EMA) has crossed above the longer-term moving average (50-EMA), suggesting a potential uptrend.
2. Price Action Relative to EMAs: When the price index crosses through the EMAs, or when one or both of the EMAs move counter to the trend, the trend is considered neutral, leaning toward bullish or bearish depending upon how many of these counter-trend conditions exist. In a bullish intermediate-term trend, the price action would be more likely to be above the EMAs, indicating a potential uptrend.
3. Volume Analysis: Higher trading volumes during uptrends can validate the bullish intermediate-term outlook. This is because increased volume often accompanies strong trends, indicating that more market participants are involved in the move.

Historically, during bullish market conditions, over 90% of stocks can be trending upward, increasing the odds of picking a winning stock. This is because the market trend generally indicates the direction of most stocks and sectors. For example, during a strong bull market, over 90% of stocks can be trending upward, increasing the odds of picking a winning stock.

In a neutral or trendless market, the prices of financial assets move within a relatively narrow and well-defined range, with no clear overall upward or downward direction. During a sideways trend, the price movements are characterized by equal or near-equal highs and lows.

The trend analysis also considers the duration of the trend, which can be short-term (minor), medium-term (secondary), or long-term (major). The primary (major) trend represents the overall direction of the market or a particular financial asset over an extended period, often measured in years. It can be an uptrend, downtrend, or sideways trend. The secondary (intermediate) trend represents the medium-term direction of the market, while the minor (short-term) trend represents the short-term direction.



In 2025, several potential catalysts could drive a sustained bullish trend in the intermediate term:

1. Economic Recovery and Earnings Growth: The global economy is expected to experience robust growth in 2025, with the exception of a sharp slowdown in China. This economic recovery could drive earnings growth for companies, which in turn could fuel a bullish trend in the stock market. For instance, J.P. Morgan Research estimates a price target of 6,500 for the S&P 500, with earnings per share (EPS) of $270, indicating a positive outlook for the U.S. equity market.
2. Sector Rotation: Sector rotation has been a dominant trend in markets since October 13, 2022, and is expected to continue in 2025. This trend, where trends develop in specific sectors and continue after a few months, could provide opportunities for investors to capitalize on short-lived trends and benefit from trend continuation.
3. Policy Changes: Policy changes in the U.S. across trade, immigration, fiscal, and regulatory policies could significantly influence outcomes in the U.S. and elsewhere for 2025 and beyond. These changes could create new opportunities and drive a sustained bullish trend in the intermediate term.
4. Inflation Dynamics: Inflation has been declining in emerging markets, which is good news for investors. If this trend continues, it could create a more favorable environment for equities, as lower inflation typically leads to lower interest rates and increased investor appetite for riskier assets like stocks.
5. Technical Indicators: The intermediate-term trend can be determined using the 20-EMA and 50-EMA on a daily chart. If the 20-EMA is above the 50-EMA, the trend is bullish. Additionally, the 20/50/200-EMAs can be used together to determine if a bearish crossover is a sell or neutral trend change. If the 20-EMA crosses below the 50-EMA while the 50-EMA is below the 200-EMA, the signal is especially bearish or a sell/short trend change. If the 20-EMA crosses below the 50-EMA while the 50-EMA is above the 200-EMA, the trend change is neutral because technically, if the 50-EMA is above the 200-EMA, it implies the longer-term trend is bullish or in a bull market - thus, "neutral" is more appropriate than "sell."
6. Market Breadth: The mid-cap space is set to benefit from improving market breadth in 2025. This could provide opportunities for investors to diversify their portfolios and participate in a sustained bullish trend in the intermediate term.

In conclusion, the technical indicators and potential catalysts discussed in this article support a bullish intermediate-term outlook for the stock market in 2025. By staying informed about the prevailing trends and utilizing a flexible approach to investing, investors can capitalize on the opportunities presented by a sustained bullish trend in the intermediate term.