SPY, the SPDR S&P 500 ETF added +0.21% last week, while the VIX closed the week out at 19.28, indicating an implied one day move of +/-1.22% & an implied one month move of +/-5.57%.
Their RSI has flattened out at the 41.75 mark, while their MACD crossed bullishly late last week, but looks primed to “dolphin” back below the signal line in the coming days.
Volumes were +23.87% above the prior year’s average level (65,666,000 vs. 53,013,052), which looks to be in part a result of a squeeze on Friday heading into the weekend when SPY had the highest volume of the week.
While the week as a whole had stronger than average volume (minus-Monday), the fact that SPY more or less tread water last week with the influx in participation should be met with a skeptical eye, particularly given how robust the 200 day moving average was in terms of limiting upper shadows with its resistance.
Monday the week opened higher, tested slightly lower before breaking through the 10 day moving average’s resistance, but was unable to break above the long-term trend line & ultimately retreated to close more in-line with the 10 DMA.
Monday’s session also had the lowest volume of the week, as investors were on the fence about hopping back into the pool & took a cautious “wait & see” approach.
Tuesday saw an open at the short-term trend line (10 DMA) & the rug was promptly pulled out from under SPY, as the rest of the session consisted of a downwards slide.
Volume was the third highest of the week on Tuesday, and the session’s lower shadow indicated that there was appetite for SPY to head towards the $555/share mark, which will be something to keep an eye on in the next week or two.
Wednesday again opened in-line with the 10 day moving average, which will be an area to continue to watch in the next week, as was highlighted in last week’s note.
The $560/share level was briefly dipped under, but shares came roaring back to attempt a run at the resistance of the 200 day moving average, which failed, but the second highest volume session of the week managed to close higher.
Thursday threw an interesting curveball to market participants, as the session formed a bearish harami pattern that opened again in-line with the 10 day moving average, ripped higher to test the long-term trend line & again failed, but managed to close above its open on the second lowest volume of the week.
That’s quite the run on sentence for limited participation.
Bearish sentiment carried over into the morning hours when on Friday SPY opened lower (and notably, below the 10 day moving average), tested slightly lower, before forming a bullish engulfing pattern with Thursday’s candle on the highest volume of the week.
It’s worth noting that Friday’s close was well beneath the 200 DMA’s resistance, indicating that there is some strong sentiment that the long-term trend has been broken.
While this morning’s session opened on a gap higher above the 200 DMA’s resistance, unless there is a substantial uptick in volume it should be viewed with a skeptic brow.
In the event of strong volume for multiple sessions above the 200 DMA’s support then the narrative will shift towards a base is being formed, however without such volume there’s not much of a story.
It will also be difficult, as per the table below SPY’s next three levels of resistance come at areas where there has been unusually high buyer volume (untested on the downside), else where sellers have historically been in control, and historic sentiments are important.
Should the gap up begin to close the window (most likely scenario), it will be interesting to see if there is a consolidation between the 10 & 200 day moving averages, or if there is a broader decline that sees SPY grind even lower than before, proving this past week to be a “breather”.
In the event of the consolidation scenario, keep an eye on whether SPY hugs the 10 or 200 DMA more tightly as it oscillates in the window & take note of where the volume is headed in terms of higher advancing or declining & the range of each day’s session; this will lend clues into the strength of the market & the next move.
Now, for the downside the $598-599 support zone is going to be interesting for a number of reasons.
Firstly, the $555-559.99/share zone is historically a Buyer dominated zone at a rate of 3.44:1, so any move that penetrates it to the downside will likely have some staying power & strong sentiment.
Secondly, there is no support for another -1.65% once the $558.91 level is broken through, which leads into a Seller dominated zone, making it likely to see continued declines from there.
Thirdly, while price may well oscillated between the 10 & 200 DMAs, the 50 DMA is approaching the long-term trend line by next Friday bearishly.
This may add a bit of extra chaos for SPY in the coming weeks at a time where most market participants are hoping for some stability & upward movement.
The table below will be worth referencing in regards to SPY’s moves over the coming weeks & should serve as a reference point for the strength/weakness of support/resistance levels.
SPY has support at the $559.92 (10 Day Moving Average, Volume Sentiment: Buyers, 3.44:1), $559.86 (Volume Sentiment: Buyers, 3.44:1), $558.91 (Volume Sentiment: Buyers, 3.44:1) & $549.67/share (Volume Sentiment: Sellers, 1.06:1) price levels, with resistance at the $564.29 (Volume Sentiment: Buyers, 1.8:0*), $569.24 (Volume Sentiment: Sellers, 1.59:1), $569.75 (200 Day Moving Average, Volume Sentiment: Sellers, 1.59:1) & $573.62/share (Volume Sentiment: Buyers, 5.33:1) price levels.
QQQ, the Invesco QQQ Trust ETF gained +0.25% last week, but despite faring better than SPY it had less volume behind the upward move.
Their RSI is also flat & sits at 41.08, while the MACD also just broke north above th signal line, but does not look to have much more than a brief “dolphin moment” in terms of a bullish signal as of now.
Volumes were +13.78% higher than the prior year’s average (40,050,000 vs. 35,198,835), which is interesting given that each day was relatively close to one another, for both advancing & declining volume.
Monday opened on a gap higher, retraced into Friday’s range, before power higher through the resistance of the 10 day moving average, but ultimately closed in-line with the resistance level.
Tuesday gapped lower & folks wanted out, as the session never even flirted with the idea of testing the 10 day moving average’s resistance, and the $475/share level broke down on the week’s second lowest volume.
It’s worth noting that the lowest volume sessions of the week were the declining days, but given how close they all were that is more of an afterthought to keep in mind, but not dwell upon.
Wednesday opened in the middle of Tuesday’s candle’s body, temporarily broke down through the $475 level, before breaking out above the 10 DMA & breaking above the $485/share price level & ultimately settling lower to $480.17.
Thursday opened below the 10 day moving average, but made a run north for the $485/share level before settling lower at $478.55, to advance on the day, but on the week’s weakest volume.
Friday opened on a gap lower but managed to squeeze higher to close at $480.84, but the day’s shadows indicated that the downside had more favor than the upside heading into the weekend.
QQQ has some upside potential should they get an influx in advancing volume, but otherwise the upside looks almost identical to last week’s post.
Should they consolidate here, the range that they’ll trade in is relatively already determined based on their chart above when looking at the past two weeks & will be impacted by the movements of the 200 & 50 DMA’s which are both applying downside pressure on price movement currently.
In the event of consolidation, watch for trends in volume that day to determine whether a genuine base is forming (more accumulation volume vs. declining volume at a noticeable clip), or to see if this “breather” is skating on thin ice/doomed.
To the downside there looks to be some troubling volume patterns & historic market behavior.
QQQ’s first support level is in a Seller zone, followed by one in a Buyer zone that has the same ratio, which doesn’t inspire confidence if a similar ratio’d downside zone gets broken through, regardless of what the volume levels look like.
They then potentially break down through an entire price zone at $468-471.99/share as it is a Seller zone, before hitting their next support level which resides in a relatively untested zone in terms of Sellers not showing up (Buyers, 1.6:0*).
What’s more troubling though is that should QQQ find itself in this situation, the next support level is in a Seller zone (1.89:1), which then leads into one potential buoy zone ($452-455.99), before re-entering Sellersville for an ultimate potential loss of -7.66% from Friday’s closing price.
if the $447.28/share support level gets tested it would be wise to continue looking out down below – reference the table below for more information.
QQQ has support at the $476.75 (10 Day Moving Average, Volume Sentiment: Sellers, 1.52:1), $474.12 (Volume Sentiment: Buyers, 1.52:1), $466.43 (Volume Sentiment: Buyers, 1.6:0*) & $458.47/share (Volume Sentiment: Sellers, 1.89:1) price levels, with resistance at the $484.08 (Volume Sentiment: Buyers, 1.88:1), $485.84 (Volume Sentiment: Buyers, 1.88:1), $493.09 (200 Day Moving Average, Volume Sentiment: Buyers, 4.13:1) & $493.69/share (Volume Sentiment: Buyers, 4.13:1) price levels.
IWM, the iShares Russell 2000 ETF climbed +0.44% last week, as the small cap index was favored over SPY & QQQ by investors.
Their RSI is trending towards oversold territory, currently sitting at 39.92, while their MACD has broken above the signal line bullishly following the mini-pump of the past week & a half.
Volumes were +1.87% above the prior year’s average (29,316,000 vs. 28,776,948), which lends subtle clues into the true market sentiment we’ll see shortly.
IWM is experiencing the same Monday morning window as the aforementioned index ETFs, but without a large uptick in volume it does not seem to have staying power.
Monday IWM opened up just beneath the 10 day moving average’s resistance, but was able to find its legs & break through it to the upside & close at over $205/share.
Tuesday resulted in a bearish harami pattern that’s lower shadow showed that there was appetite for IWM to trade below the support of its 10 day moving average on the week’s weakest volume.
Wednesday opened in the middle of Tuesday’s range, tested the support of the 10 DMA but managed to rally higher & temporarily break above the $207.50/share level on the week’s second highest volume.
Thursday formed a bearish harami pattern with Wednesday’s candle, and any notion of IWM breaking & staying above the $207.50/share level was dispelled, as the session’s upper shadow didn’t even make the mark & a bearish shooting star candle formed.
While it closed above its open, Thursday offered the second lowest volume of the week, which one would not expect given the nature of the higher close than open but still down day that had such a test to the upside that the bears ultimately thwarted.
Friday added another layer of interesting to the mix, opening on a gap lower in-line with the support of the 10 DMA, testing below it, before climbing to close above its open, but still for a declining -0.62% session on the week’s highest volume.
This is important for a few reasons.
Firstly, it shows that there is going to be a continued relationship between IWM’s price & the 10 DMA in the near-term.
Second, if the notes above on SPY & QQQ are any indicator, this was a squeeze play heading into the weekend, which when paired with the window up this morning is setting the stage for more declines after oscillators have recalibrated & algorithms can pummel them again (potentially**)
And IWM’s 50 DMA will bearishly cross their 200 DMA today, which will apply downwards pressure tomorrow or later in the week, which means a consolidation is the current best chance scenario.
In the event of a consolidation range forming it will likely oscillate around the 10 DMA & move in the direction of the higher volume trend.
In the worst case scenario things get iffy, as IWM has a bit of Seller sentiment for the next 7 support levels (4/7 skew to Sellers).
If $195.72 breaks down as support all eyes should shift to the $189.17/share level, which IWM will be walked to most likely based on historic volume sentiment & only one support level between the two (which is a weaker Buyers zone).
IWM has support at the $202.48 (10 Day Moving Average, Volume Sentiment: Buyers, 1.54:1), $202.46 (Volume Sentiment: Buyers, 1.54:1), $196.56 (Volume Sentiment: Buyers, 2.5:1) & $195.72/share (Volume Sentiment: Buyers, 1.15:1) price levels, with resistance at the $205.49 (Volume Sentiment: Buyers, 1.21:1), $207.39 (Volume Sentiment: Buyers, 1.21:1), $207.68 (Volume Sentiment: Buyers, 1.21:1) & $209.47/share (Volume Sentiment: Buyers, 2.64:1) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF advanced +1.03%, as the blue chip index was the favorite among market participants, but at extremely low levels of optimism.
Their RSI is also flat at 43.28, while their MACD is also set up to “dolphin” above the signal line, but does not appear to have much conviction behind a higher move.
Volumes were -37.99% lower than the prior year’s average level (1,986,000 vs. 3,202,731), which is problematic when you consider that DIA had the strongest week of the major index ETFs.
Monday began on an interesting note, as the session managed to break above the 200 DMA’s resistance, but was thwarted by the resistance of the 10 day moving average, making the breakout above the long-term trend line highly questionable.
Tuesday opened lower, broke down through the support of the 200 day moving average & broke south of the $415/share mark, before settling above it but below both the 10 & 200 day moving averages, forming a bearish harami pattern in the process.
Wednesday saw an open below the 10 & 200 DMAs which were set to cross (bearishly), but managed to scrape up an advancing session whose upper shadow indicated that there was some appetite higher, but that bears were still content on keeping prices near the 10 & 200 DMAs.
Thursday threw more bearish signals into the mix, but with a spike of optimism as DIA managed to break north to $422.33 & establish a new resistance level, but while they closed above the day’s open it was below Wednesday’s closing price, and on the week’s weakest volume.
Friday threw a bullish engulfing candle into DIA’s near-term mix, but while it was on the week’s strongest level of volume, it was hardly anything to write home about given how low their overall volume sentiment was for the week.
While it closed above both the 10 & 200 day moving averages it will require a major uptick in advancing volume, much like the aforementioned index ETFs.
As of 2pm there is a decent amount of advancing volume of the day’s gap up, but recall that last week’s volume was participation trophy level & nothing to be taken serious, so the rest of the week’s got a long ways to go if there’ll be any true reversal (pending a major news catalyst).
DIA’s potential consolidation range is similar to the one mentioned above for SPY, as they’re beginning to trade more closely than they did over the prior year now that times have become uncertain (SPY & QQQ traded more tightly & DIA became decoupled & moved more in-line with IWM).
It seems most likely that they’ve continue oscillating around the 200 DMA in the near-t0-mid term, but will be worth watching closer once the 50 day moving average’s resistance closes in & begins to look set to cross bearishly through the long-term trend line.
To the downside/insurance view, prices are in a Seller zone per Friday’s close, with the next price box Even between buyers & sellers historically.
This sets up an interesting situation, as should the $408.98/share support level be tested it is in a Buyer dominated zone that has not been well tested over the past ~5 years.
While the $404-407.99/share level is also Buyer dominated, the sentiment is not as strong, setting sights on the $407.35 & $406.47/share levels, which should they be broken through DIA will most certainly skid into <$400/share.
In the event that this happens the $396-399.99/share zone will become an interesting point to watch, as it has one support level & a lot of untested Seller volume potential.
This is -4.69% away from Friday’s close, so it’s something to consider, but not dwell upon.
DIA has support at the $417.55 (200 Day Moving Average, Volume Sentiment: Sellers, 1.11:1), $416.93 (Volume Sentiment: Sellers, 1.11:1), $416.11 (10 Day Moving Average, Volume Sentiment: Sellers, 1.11:1) & $413.42/share (Volume Sentiment: Even, 1:1) price levels, with resistance at the $420.13 (Volume Sentiment: Buyers, 1.5:1), $422.33 (Volume Sentiment: Buyers, 1.5:1), $426.79 (Volume Sentiment: Sellers, 2.25:1) & $430.06/share (Volume Sentiment: Buyers, 4.5:1) price levels.
The Week Ahead
Monday the week kicks off with S&P Flash U.S. Services PMI & S&P Flash U.S. Manufacturing PMI data at 9:45 am.
KB Homes reports earnings after Monday’s closing bell.
Philadelphia Fed Manufacturing Survey data comes out Tuesday at 8:30 am, before S&P Case-Schiller Home Price Index (20 Cities) at 9 am, and Consumer Confidence & New Home Sales data at 10 am.
Tuesday morning’s earnings calls include Canadian Solar, Core & Main, Cormedix & McKormick & Company, followed by GameStop & Worthington Enterprises after the session’s close.
Wednesday begins with Durable-Goods Orders & Durable-Goods Minus Transportation data at 8:30 am, followed by St. Louis Fed President Musalem speaking at 1:10 pm.
Dollar Tree, Chewy, Cintas, Jinko Solar, Paychex & Target Hospitality all report earnings before Wednesday’s opening bell, with Concentrix, H.B. Fuller, Jefferies, MillerKnoll, Petco Health & Wellness, Steelcase & Verint Systems reporting after the closing bell.
Initial Jobless Claims, GDP (Second Revision), Advanced U.S. Trade Balance in Goods, Advanced Retail Inventories & Advanced Wholesale Inventories data are all released at 8:30 am, before Pending Home Sales data at 10 am & Richmond Fed President Barkin speaks at 4:30 pm.
Thursday morning includes earnings from TD Synnex & Winnebego, before Lululemon Athletica, AAR Corp, Argan, Braze & Oxford Industries report earnings after the session’s close.
Friday the week winds down with Personal Income, Personal Spending, PCE Index, PCE (Year-over-Year), Core PCE Index & Core PCE (Year-over-Year) at 8:30 am, before Consumer Sentiment (Final) at 10 am & there are no noteworthy earnings reports.
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 ***
