The Monday Morning Playbook: Week of August 18, 2025

Good morning,

When the last Monday Morning Playbook was released on August 4, the S&P 500 was coming off its worst two-day stretch since May and had just broken its 21-DMA for the first time since late April.

The average stock was faring even worse, with the equal-weight S&P 500 on a five-day losing streak and new lows beginning to expand.

It seemed like the calendar was rearing its ugly head right on time.

So what happened in the two weeks since?

The market has gone straight up. And yes, “the market”, not just the Mag 7, or AI stocks, or the most speculative growth names.

Small caps have been the best-performing equity asset class over the past two weeks, while consumer discretionary has been the top sector. Not exactly a bearish combination.

We always want to be careful betting against long-term relative trends. But as today’s charts will show, there are some reasons to think the rotation trade could have legs, and investors should be willing to lean into some of the laggards.

This week’s report will review:

• What happened while we were away

• Important charts in the healthcare sector

• 3 charts that show why this market could have huge upside

• Fixed income

• Commodities and the dollar

• and more!