SPY, the SPDR S&P 500 ETF climbed +2.49% last week, while the VIX closed the week at 15.15, indicating an implied one day move of +/-0.95% & an implied one month move of +/-4.38%.
Their RSI is climbing towards the overbought 70 level & is currently at 62.7, while their MACD is bearish, but moving towards the signal line.
Volumes were +13.26% higher than the prior year’s average (68,778,000 vs. 60,725,181), which will be something to look more closely at in the coming weeks as the highest volume session of the week was a decline.
Monday gave us the second highest volume of the week on an advancing day that sparked the brief recovery we’ve seen since Friday’s gap down of the previous week.
SPY was unable to approach the 10 day moving average’s resistance, which is also disappoitng given the volume situation outline before.
Tuesday opened higher & flirted with the 10 DMA’s resistance, but was unable to break out above it & as a result declined on the day.
Wednesday opened slightly higher & made another attempt at the 10 DMA, but again failed to break out above it.
Thursday opened on a gap up above the 10 DMA’s support, but profit takers stepped in, forcing the day temporarily below the 10 DMA, but the highest volume session of the week managed to close in-line with the near-term trend line.
Friday was an interesting way to enter the weekend, as a higher open managed to continue higher throughout the day, resulting in an advance of +0.78% for the day.
Moving into the new week where a lot of emphasis will be placed on the CPI data Tuesday & PPI data set for release on Wednesday, the upside case for SPY remains the same as it has in weeks past.
We’re sitting right below their all-time high, market participants have shown they’re cautiously optimistic here, it’s going to require a great deal of advancing volume to ensure that there is staying power behind the move & that it doesn’t crumble into a giant profit-taking event.
The consolidation case is also similar to what we’ve said & what we’ve been seeing, as SPY has osciallated around the 10 day moving average for the past two weeks.
In the downside case there is Buyer pressure historically from Friday’s closing price down to $624.99/share, where SPY then enters a Sellers zone.
The bottom of that zone brings us to the $619.29/share support level, which has historically been Buyer oriented, but given that the 50 day moving average’s support is also in that zone, if there is souring medium-term outlooks expect to see that break down, leading to $609.59/share as the next support level.
SPY has support at the $632.18 (10 Day Moving Average, Volume Sentiment: Buyers, 1.33:1), $619.29 (Volume Sentiment: Buyers, 1.8:1), $615.51 (50 Day Moving Average, Volume Sentiment: Buyers, 1.5:0*) & $609.59/share (Volume Sentiment: Buyers, 4.8:1) price levels, with resistance at the $639.85/share (ALl-Time High, Volume Sentiment: Sellers, 1.5:1) price levels.
QQQ, the Invesco QQQ Trust ETF advanced +3.73%, as the tech-heavy index had the strongest performance of the major index ETFs.
Their RSI is approaching the overbought 70 level & currently sits at 65.79, while their MACD is bearish but approaching the signal line, with its fate likely going to be determined by Tuesday’s CPI data.
Volumes were +10.86% higher than the prior year’s average levels (43,576,000 vs. 39,307,992), which like SPY’s week featured the highest volume session on a declining day, which shows that there’s cautious optimism in the air.
Monday the week began on a note of recovery, opening in-line with Friday’s open, but climbing throughout the day to be just below the resistance of the 10 day moving average.
Tuesday opened on a gap higher to above the 10 DMA, but profit taking & jitters kicked in, forcing the week’s highest volume & a decline that closed back below the 10 DMA’s resistance, near Monday’s opening level.
Wednesday opened at a similar level to Tuesday’s close, but was able to power higher & break out above the 10 DMA’s resistance, but it should be noted that this occured on the second lowest volume of the week, which may mean that there is a bit of hesitency creeping in here.
Thursday opened on a gap higher, proceeded to test a little higher, before ultimately collapsing to close lower than it opened & the day’s low was supported by the 10 day moving average.
This shows that there is still some faith in the short-term trend, but that there is a less engaged market in terms of participation, if not on account of vacations being taken etc… will expose cracks in the near-term.
Friday confirmed this, as despite setting a new all-time high intraday, QQQ had its lowest volume of the week, showing that there is indeed uncertainty out there.
The upside case is the same as its been for the past few weeks, there will need to be more high volume advancing sessions to force any major sustainable breakout higher in the near-term.
The consolidation case looks much like a continuation of what we saw last week, oscillations around the 10 day moving average as we await an upside or downside catalyst.
To the downside, the historic volume data skewes towards the Buyers for the next ~3.5%, before the $550-554.99/share price zone is entered which has been Seller dominated historically.
Should that break down, the 50 day moving average will be the area to keep an eye on, as if QQQ can’t even force consolidation around it then the next support levels is $539.40.
QQQ has support at the $565.78 (10 Day Moving Average, Volume Sentiment: Buyers, 1.39:1), $551.68 (Volume Sentiment: Sellers, 1.28:1), $547.90 (50 Day Moving Average, Volume Sentiment: Buyers, 1.92:1) & $539.40/share (Volume Sentiment: Buyers, 5.5:1) price levels, with resistance at the $574.63/share (Previous All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF gained +2.51% for the week, as small cap names outperformed the blue chip members of the Dow.
Their RSI is flat in line with the neutral 50 level & sits at 51.06, while their MACD is bearish.
Volumes were +2.41% higher than the prior year’s average (30,976,000 vs. 30,247,068), which signals that folks aren’t jumping at the opportunity to be in the small cap names at these high valuations & that there is some fear in the market.
Monday featured a similar recovery theme for IWM, opening on a gap up to above the 50 & 200 day moving averages, who had just completed a golden cross the day before.
Tuesday featured another gap up open, which retraced lower as profits were taken from the recent price run up which forced IWM to retrace midway through Monday’s candle’s real body, but the small cap index roard back to close for an advance, but it came with a catch.
The first thing of note is that it was unable to break above the resistance of the 10 day moving average & the second was that it resulted in a spinning top & a hanging man candle, the former expressing confusion among market participants & the latter being bearish.
Wednesday also had a troubling aura to the day, as another spinning top candle was produced signaling confusion in the market, and the candle formed a bearish engulfing pattern with Tuesday’s candle, all the while, the 10 day moving average’s resistance did not break down.
Thursday came along with even more bad news, as the gap up open that broke out above the 10 DMA quickly broke down with profit taking, a bearish engulfing pattern emerged day-over-day(-over-day), and the week’s highest volume session showed that market participants think that IWM belongs lower, as noted by the lower shadow on the day’s candle.
Friday also flashed warning lights, as the session opened above the 10 day moving average, but broke down to close lower than the day’s open & below the 10 DMA’s resistance, effectively forming a bearish harami pattern & indicating that there is an extreme lack of confidence in IWM & small caps at the moment.
The upside case here will likely hinge upon what the other major indexes do, as with valuations where they are on many companies & markets at these high levels, there is unlikely to be much demand for small caps in the near-term.
The $225.37 & $226-226.99 resistance zone will be the primary places to watch in the event of any upside movement, as they are the gatekeepers.
The consolidation case looks a lot like what we’ve been seing since mid-July where IWM oscillates around the 10 day moving average awaiting the upside or downside catalyst that causes it to break in a direction.
To the downside, assuming that the strength of support from the 200 & 50 day moving averages breaks down the $212.90/share level is going to be the top area of interest, as it is in a historically Seller-oriented price zone, and if it is unable to hold up will cause further declines as death crosses emerge from the moving averages above.
IWM has support at the $219.93 (Volume Sentiment: Buyers, 1.07:1), $219.57 (Volume Sentiment: Buyers, 1.07:1), $216.91 (Volume Sentiment: Buyers, 1.07:1) & $216.80/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.07:1) price levels, with resistance at the $220.40 (10 Day Moving Average, Volume Sentiment: Buyers, 1.87:1), $222,40 (Volume Sentiment: Buyers, 1.87:1), $222.84 (Volume Sentiment: Buyers, 1.87:1) & $224.60/share (Volume Sentiment: Buyers, 1.06:1) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF added +1.42%, faring the worst off the major index ETFs for the week.
Their RSI has been straddling the neutral 50 level, currently sitting at 51.33, while their MACD is still bearish & declining.
Volumes were +31.38% higher than the prior year’s average (4,204,000 vs. 3,199,960), but like the others above, the highest volume came on a declining day.
Monday featured a recovering advancing session following the Friday before’s gap down on the week’s highest volume.
Profits were taken Tuesday & uncertainty filled the air when the declining session resulted in a spinning top candle.
Wednesday added to the confusion with a doji candle that closed +0.19% higher for the day.
Thursday opened optistically on a gap up to above the 10 day moving average, but profits were promptly taken, forcing DIA back below the 10 DMA & indicating that there was further downside appetite on the week’s highest volume session & a bearish engulfing pattern was formed.
Friday indecision remained, as DIA opened higher, tested higher but was unable to break above the 10 day moving average, and a spinning top candle was formed.
While a bullish harami was also formed, the resistance of the 10 day moving average adds skepticism about the power of the sentiment behind it.
Heading into the new week, the upside case will rely upon the 10 day moving average breaking as a resistance level, which it did briefly last week, but has been unable to for weeks.
Once that happens, the $446.554-446.82 level will be interesting, as that little resistance zone is the gatekeeper to the all-time high price level.
The consolidation case remains unchanged & looks like the 10 day moving average being oscillated about while we await news to the upside or downside.
To the downside, the $439.66 level will be important to watch, for if it breaks down it looks likely that the 50 day moving average’s support also will too.
If the $433.40/share level doesn’t hold up, then the retest of the $430.10/share level will be interesting as it resides in a Seller dominated zone & is only 1% above another Seller dominated zone, which could lead to further declines.
DIA has support at the $439.66 (Volume Sentiment: Buyers, 1.6:1), $436.28 (50 Day Moving Average, Volume Sentiment: Buyers, 1.6:1), $433.40 (Volume Sentiment: Buyers, 1.88:1) & $430.10/share (Volume Sentiment: Sellers, 1.22:1) price levels, with resistance at the $442.32 (10 Day Moving Average, Volume Sentiment: Buyers, 2.73:1), $446.54 (Volume Sentiment: Buyers, 2.73:1), $446.82 (Volume Sentiment: Buyers, 2.73:1) & $450.25/share (All-Time High, Volume Sentiment: Buyers, 9:1) price levels.
The Week Ahead
Monday is quiet on the economic news front.
AAON, Barrick Mining, Ceva, Dole PLC, Excelerate Energy, Franco-Nevada, Green Plains, Kymera Therapuetics, Legend BioTech, Owens & Minor, Roivant Sciences, Rumble & Telephone & Data all report earnings before Monday’s opening bell, before AMC Entertainment, ACV Auctions, BigBear.ai, Cannae Holdings, Celanese, Compass Minerals, Fluence, Forward Air, Getty Images, Green Dot, HighPeak Energy, Hillenbrand, Macerich, Mercury, MeridianLink, Oklo Inc., PubMatic, Repay Holdings, Xenon Pharmaceuticals & ZipRecruiter report after the closing bell.
NFIB Optimism Index data is released Tuesday at 6 am, followed by Consumer Price Index, CPI Year-over-Year, Core CPI & Core CPI Year-Over-Year data at 8:30 am, Fed President Schmid speaking at 10 am & Monthly US Federal Budget data at 2pm.
Tuesday morning opens with Cardinal Health, Circle Internet Group, eToro Group, HUYA, MSG Sports, On Holding, Paysafe, Sea Ltd., Smithfield Foods, Tech target & Tencent Music’s earnings calls before the session’s open, with Alcon, CAE, CAVA Group, CoreWeave, Everus, H&R Block, Intapp, KinderCare Learning Companies, Lumentum, Luminar Technologies & WEBTOON Entertainment report after the closing bell.
Wednesday features Fed President Bostic speaking at 12:30 pm.
Arcos Dorados, Brinker International, Global-E Online, Hudbay Minerals, Loar Holdings, Marex Group, Performance Food Group, Sapiens International & Stratasys report earnings before Wednesday’s open, with Cisco Systems, Coherent, dLocal Limited, Equinox Gold, Ibotta & Standard Aero reporting after the session’s close.
Initial Jobless Claims, Producer Price Index, Core PPI, PPI Year-over-Year & Core PPI Year-over-Year data are all released Thursday at 8:30 am, before Fefd President Barkin speaks at 2 pm.
Thursday morning features earnings from Advance Auto Parts, Amcor, Applied Industrial, Birkenstock Holding, Cellebrite DI, Deere, First Majestic Silver, JD.com, NICE, Tapestry, VIPShop & Weibo, followed by Applied Materials, Gambling.com Group, Globant, Sandisk & Starz Entertainment after the session’s close.
Friday opens with U.S. Retail Sales, Retail Sales Minus Autos, Empire State Manufacturing Survey, Import Price Index & Import Price Index Minus Fuel at 8:30 am, before Industrial Production & Capacity Utilization data at 9:15 am & Business Inventories & Consumer Sentiment (prelim) data at 10 am.
Flower Foods reports earnings before Friday’s opening bell.
See you back here next week!
*** I DO NOT OWN SHARES OR OPTIONS CONTRACT POSITIONS IN SPY, QQQ, IWM OR DIA AT THE TIME OF PUBLISHING THIS ARTICLE ***