Author: OptimizedValue

SPY, the SPDR S&P 500 ETF tread water this week while the weak volume trend continued for an eighth consecutive week, dipping -0.05%, while the VIX closed the week at 12.44, indicating a one day implied move of +/-0.78% & a one month implied move of +/-3.6%.

Their RSI is currently at 65.99 & trending back out of overbought territory due to Friday’s declining session after having spent a couple of weeks above 70, while their MACD has crossed over bearishly, indicating near-term declines are on the horizon.

Volumes were -36.35% below average compared to the prior year (46,059,666 vs. 72,363,608), indicating a severe hesitancy on the part of market participants & signaling flashes of fear.

This is compounded by the fact that for eight straight weeks there have been severely low volumes, which amounts to ~17% of the annualized average volume calculation, indicating that it has been dragged down even lower than it appears as higher volume sessions from last year have been dropped off from close to one fifth of the calculation.

Last week’s volume was low, but looked more acceptable due to the shortened trading week being reduced by 20% by day count, but another troubling element to the recent volume picture is that most of the higher volume days of June were declining sessions.

In fact, the last time there was an advancing session that had more volume than the highest volume sessions of June (which were declining sessions) came on May 31,2024.

Couple this with the narrow daily trading ranges shown by the real bodies & shadows of the candlesticks for the month of June , particularly towards the end of the month & it begins to paint a not so rosy picture for near-term stock performance.

Monday opened the week up with a negative note, as the session opened close to Friday’s close, tested a bit higher as shown by the candle’s upper shadow & then ultimately dropped down to test the support of the 10 day moving average, but managed to close the day above it.

Monday’s volume was also the second highest of the week, as the strongest volume sessions of the week came in the form of declining days.

The risk-averse theme continued into Tuesday, where an even lower volume day hugged the 10 DMA but resulted in a slight advance & the strength of the support level was maintained.

Wednesday opened right at the 10 DMA & was able to break out below it temporarily during the session, but by the end of the day bulls stepped back in to force a slight gain for the day, but between the low volume & the narrow price range of the day it did not inspire confidence in market participants.

Thursday was able to open near the close of Wednesday & stay above the 10 DMA.

However, Thursday’s session had the week’s lowest volume & narrowest trading range, setting the stage perfectly for Friday’s risk-off into the weekend move.

Friday set the tone for the coming week or two, as the day resulted in the week’s widest price daily price trading range on the week’s highest volume.

While there was a push to the upside to reach a new all-time high, all hopes quickly deflated after a move to the downside broke through the support of the 10 DMA & the session’s price also closed below it.

Friday’s candle bearishly engulfed Thursday’s, setting the stage for more cooling off in the next week(s).

SPY’s Average True Range began to advance late in the week due to the strength of Friday’s move & volume & it appears that it will continue to climb higher in the coming week or two as we see an increase in volatility.

This week will be a relatively quiet week on the economic data & earnings, however there will be a handful of Fed speakers, including Chairman Powell on Tuesday morning in Portugal.

With this in mind & the fact that there will be a half day of trading Wednesday & the market closed Thursday for July 4th all eyes should be on volumes this week, in particular looking at the relationship between how they stack up against recent full trading weeks’ volumes.

This week will feature ~30% less trading hours than usual, so while volumes should be expected to be lower than average, how much lower they are & in what direction the markets trade will be a strong tell about how the month of July is likely to go for SPY & the other major index ETFs.

Additionally, keep an eye on how prices behave as they approach the $540/share mark for SPY, as that is the gateway to the most recent gap up.

While the window itself should serve as a form of support, once it begins to fill it will provide additional insight into whether SPY will consolidate in the near-term or if there will be a more aggressive decline from Friday’s close.

The 10 day moving average is applying downward price pressure now & if there is a movement through the gap of early June we will be keeping an eye on the nearest support levels (including the 50 day moving average) which have not really been tested much & have limited trading volume around them.

In the event prices do get close to the 50 DMA & or should they break below them, a head & shoulders pattern may be forming with the left shoulder being the end of March/early April.

In the event of that happening, it is more than likely not to be this week due to the shortened nature of it, but it is worth keeping in the back of your mind for the future.

SPY has support at the $531.35 (Volume Sentiment: NULL, 0:0*), $524.41 (50 Day Moving Average, Volume Sentiment: NULL, 0:0*), $522.92 (Volume Sentiment: NULL, 0:0*) & $516.69/share (Volume Sentiment: Buyers, 2.5:1) price levels, with resistance at the $544.65 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $550.28/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100 also was treading water with light volumes, closing -0.06% down for the week since last Friday’s close.

Their RSI is currently at 64.54, also after having spent a couple of weeks in overbought territory, while their MACD crossed over bearishly earlier in the week.

Volumes were spotted out by the tumbleweeds, down -33.45% below the prior year’s average (30,136,911 vs. 45,282,963), indicating that the Q2 rally that kicked off in late April has likely run out of steam as market participants have become tired & skeptical about gains continueing.

Unlike SPY, QQQ had the strongest volume of last week on Monday, which was a declining day though.

Monday opened on a gap down & while the bears were not in full control (as indicated by the upper shadow of the session’s candle) they stepped in & pushed prices down below the support of the 10 day moving average & the session was unable to recover to close above it.

The upper shadow did set the stage for the middle three days of the week to slightly advance in a similar manner to SPY, weakest volume sessions of the week & straddling the 10 day moving average’s support.

Tuesday opened below the 10 DMA, tested lower, before ultimately climbing to close above it.

Wednesday opened in-line with the 10 DMA & bumped higher in a narrow-range day that resembled a spinning top candle without much upper or lower shadow, indicating that there was a great deal of hesitancy & temporary complacency at its current price level.

Thursday also opened in line with the 10 day moving average’s support propping the open higher, temporarily broke below the support level confirming that the prior two day’s price action was not built on strong foundations & was able to push higher.

Friday was the final squeeze early in the session as prices did open to the upside & test higher (long upper shadow), but much like SPY the rug was pulled out from under QQQ as profits were taken following the uncertainty of Thursday night’s debate & as investors eyed this coming short week.

Friday’s close was below the 10 DMA, giving its price downward pressure now in the form of a falling resistance level.

Friday’s bearish engulfing candle was able to make QQQ’s Average True Range begin to advance again, which looks set to continue this week as volatility seems primed to increase in the coming weeks.

Given that QQQ & SPY have both been the recipients of the good fortune that comes from having NVDA as a component recently the items to keep an eye out for this week area the same between the two indexes.

In QQQ’s case one additional thing to note is that their RSI appears to be in the midst of a bearish head & shoulders/just completed its right shoulder.

Watching their RSI as they decline will be important, especially as the approach the neutral mark of 50 midway through the oscillator as it may help give insight into magnitude of near-term price movements.

In terms of the head & shoulders pattern that is emerging on SPY’s chart, QQQ’s is a little different, but is still certainly in play, especially if the support of the early-June gap is broken & the 50 DMA is unable to support price action.

Fortunately for QQQ, their ascent had more consolidations, leading them to have more support levels that may help soothe any blows that their price takes better than SPY, whose more rapid ascent leaves it with less support at local levels.

QQQ has support at the $459.85 (Volume Sentiment: NULL, 0:0*), $452.17 (50 Day Moving Average, Volume Sentiment: NULL, 0:0*), $448.63 (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $447.34/share (Volume Sentiment: Buyers, 3.67:1) price levels, with resistance at the $480.17 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $487.20/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

IWM, the iShares Russell 2000 ETF was the lone bright spot of the major four index ETFs this week, advancing +1.27%, but also on lackluster volume.

Their RSI just crossed above the neutral level of 50 & sits at 52.82, while their MACD crossed over bullishly on Thursday after IWM was able to break above the resistance of the 10 & 50 day moving averages & close above them.

Volumes were -34.18% below average compared to the previous year (22,021,443 vs. 33,455,951), signaling that the gains of the week were not necessarily on true strength & should be viewed with a skeptical eye.

While it didn’t come out of an uptrend, but rather more of a consolidation range Monday’s candle can’t be viewed as a shooting star, but it certainly resembled one & looked as though IWM’s week was going to start off on a weak foot.

However, due to how it opened in between the support of the 10 day moving average & the resistance of the 50 DMA & tested much higher, it implied that there was a small bit of appetite to the upside for IWM.

Tuesday opened roughly in line with Monday’s close & the 50 day moving average, but prices were forced lower throughout the session & wound up settling in a cradle atop the 10 DMA’s support & below the 50 DMA’s resistance on this declining session.

Wednesday opened on a gap down indicating that there may be further weakness in the cards for IWM, but despite some testing lower the session closed higher than it opened, but still for a declining session.

Wednesday was unable to break above the resistance of the 10 DMA, setting up Thursday to open in line with it.

The session tested lower Thursday, before ultimately making a bullish run up to close above both the 10 & 50 day moving averages.

Friday ended the week on a bit of an ominous note though, as prices opened on a high gap up, signaled that there was some upside appetite still based on the upper shadow, but then fell apart as the day progressed & profits began to be taken in droves, as indicated by it being the strongest volume session of the week.

It is worth noting that Friday’s test to the downside was able to break the support of the 50 DMA, indicating that there is not a lot of strong sentiment there as a support level.

IWM’s Average True Range is still increasing due to the volatility of Friday’s session, and should continue to in the coming weeks.

As we note almost weekly, IWM moves far more in a manner of oscillating around a median price level when compared to how SPY & QQQ move, giving them more support levels nearby for the near-term.

If IWM’s 10 day moving average breaks down as a support level, it will be imperative to keep an eye on the gaps from early May & early June to see if prices begin to fill into those levels.

Their highs are still set up in a descending manner & given the signs that the other major index ETFs are flashing about a near-term consolidation/decline IWM can be expected to follow suit in the coming weeks.

IWM has support at the $201.73 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $200.69 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $198.60 (Volume Sentiment: Buyers, 2.47:1) & $198.35/share (Volume Sentiment: Buyers, 2.47:1) price levels, with resistance at the $203.68 (Volume Sentiment: Buyers, 1.08:1), $204.40 (Volume Sentiment: Buyers, 1.83:1), $207.27 (Volume Sentiment: Buyers, 1.83:1) & $209.19/share (Volume Sentiment: Buyers, 2.75:1) price level.

DIA, the SPDR Dow Jones Industrial Average ETF matched SPY in terms of weekly performance, chalking up a -0.05% decline for the week.

Their RSI is trending back towards neutral & sits at 54.74, while their MACD is still bullish but has flattened out in the wake of the consolidation of the past week.

Volumes were the most bountiful of the major four index ETFs, only falling -27.53% below the average volume for the previous year (2,527,411 vs. 3,487,726),

Monday kicked DIA’s week off on what appeared to be a strong note, where prices advanced & volumes were on the higher end of what we’ve been experiencing over the past eight weeks.

However the tall upper shadow on the candle indicates that there was not much strength for the bulls & that there was a great deal of selling pressure coming from the bears.

Tuesday this was confirmed, when on similar volumes DIA declined after opening near the middle of Monday’s price range & making a break towards the 10 day moving average’s support.

Wednesday saw DIA open to the downside, test the 10 DMA’s support & briefly break through it, only to rally & ultimately close higher.

It should be noted that this occurred on the weakest volume of the week, indicating that there was little strength behind the move & leaving market participants on edge & without a sense of confidence in the price movement.

Thursday was similar to Wednesday, DIA opened midway through the previous day’s range & tested the 10 DMA’s support again but was able to recover & close higher on slightly higher volume than Wednesday’s session.

The upper shadow on Thursday’s candle shows that there was a bit more appetite to go higher than Wednesday, but the low volumes continued to keep folks skeptical about future gains in the near-term.

Friday closed the week off on a long-legged doji, indicating severe uncertainty & a lack of confidence on the part of market participants, paired with the week’s highest volumes, indicating that there was a major profit taking & risk-off sentiment.

DIA was unable to break above the $395 mark on its upper shadow & did break down below the 10 DMA’s support, indicating that it is being viewed more weakly by investors.

The strength of the 10 & 50 day moving averages as support will play an important role for DIA in the next couple of weeks, especially as the increasing volatility of the past week has gotten their Average True Range perked up.

Should they break down, keep an eye out to see how the potential head & shoulders set up plays our for DIA using the $397.13 price level of March as the left shoulder & the $395.59/share mark of June as the left.

Should prices approach the $376.08 level there will be a need to analyze the possibility of a reversal at that level, given that that is an interior support level between the left shoulder & the head.

Should it be broken to the downside then the $374.94 & $368.09/share levels will be where attention must be focused in terms of support before a potential decline into the area of last year’s Q3 major price run up into 2024.

Adding complexity to the mix is that NVDA is not a DJIA component & so DIA has not benefitted by its aggressive price movements directly.

Should the semiconductor stocks all take a hit leading to SPY & QQQ to face aggressive declines, will DIA & IWM who have little to no exposure to these names be able to consolidate with minimal losses or will they be dragged down in a panic with the former two indexes?

That will be a question sure to be on everyone’s mind.

DIA has support at the $391.04 (Volume Sentiment: Buyers, 1.08:1), $390.31 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $390.24 (Volume Sentiment: Buyers, 1.08:1) & $387.86/share (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) price levels, with resistance at the $395.59 (Volume Sentiment: Sellers, 3.5:1), $397.13 (Volume Sentiment: Buyers, 0.6:0*) & $399.83/share (All-Time High, Volume Sentiment: Buyers, 0.6:0*) price level.

The Week Ahead

Monday kicks off a new month with S&P Final U.S. Manufacturing PMI at 9:45 am & Construction Spending & ISM Manufacturing data at 10 am.

There are no noteworthy earnings reports set to be released on Monday.

Federal Reserve Chair Jerome Powell speaks in Portugal Tuesday morning at 9:30 am, followed by Job Openings at 10 am & Auto Sales (TBD).

Tuesday morning brings earnings reports from MSC Industrial & Radius Recycling, with Simulation Plus scheduled to report after the session’s close.

Wednesday begins with NY Fed President Williams speaking in Portugal at 6:30 am followed by ADP Employment, Initial Jobless Claims & U.S. Trade Deficit data at 8:30 am, S&P Final U.S. Services PMI data at 9:45 am, Factory Orders & ISM Services data at 10 am & the Minutes of the June FOMC meeting at 2pm.

Constellation Brands will report earnings before Wednesday’s open before a half day due to the July 4th holiday.

Thursday is July 4th & there are no scheduled data or earnings announcements as the market is closed.

U.S. Employment Report, U.S. Unemployment Rate, U.S. Hourly Wages & Hourly Wages Year-over-Year are all released on Friday at 8:30 am & there are no notable earnings reports scheduled for the day.

See you back here next week & have a great Fourth of July!

*** I DO NOT OWN SHARES OR OPTIONS CONTRACT POSITIONS IN SPY, QQQ, IWM or DIA AT THE TIME OF PUBLISHING THIS ARTICLE ***

SPY, the SPDR S&P 500 ETF added +0.64% last week, while the VIX closed at 13.2, implying a one day move of +/-0.83% & a one month move of +/-3.82%.

Their RSI is still in overbought territory at 72.13 while trending back towards neutral, while their MACD is still bullish, but looking like it will roll over & bearishly cross the signal line this week.

Volumes were still muted at -20.55% below average vs. the prior year (57,970,675 vs. 72,969,048), which is low, but still better than previous weeks given that there were only four trading sessions last week.

However, given that this is now the seventh week of abnormally low volumes 13.5% of the weekly volumes for the past year’s calculation are now distorting the calculation lower, which is something to be kept in mind.

Monday the week began on an interesting note, as a wide range candle on mediocre volume advanced SPY higher.

Tuesday also was an advancing session, however it was the weakest volumes of the week & was hardly able to the the high of Monday’s session.

Wednesday the market was closed & when it came back Thursday the lack of enthusiasm continued, with Thursday’s session featuring the highest volume of the week on a decline.

Also important, Thursday’s candle formed a bearish engulfing pattern with Tuesday’s candle, setting the stage for further near-term declines.

Friday confirmed this with another declining session on high volume heading into the weekend.

Friday’s candle resulted in a doji, indicating indecision & that there is a bit of hesitancy on the part of market participants.

Much like last week, this week SPY’s 10 day moving average & MACD will be a key area of focus.

Their MACD is primed for a bearish crossover this week which would result in an uptick in volatility & their Average True Range.

The 10 DMA will be important as it currently sits <1% below the current price of SPY & is inching closer to the price each day, & the next level of support below that is an additional -2% from the current price.

As noted in previous weeks’ notes, there are sparse local support levels for SPY due to the nature of their ascent over the past year & the next level of support beneath that is going to be a -5% decline from the current price.

It is also worth noting that there has been muted volumes around most of these support levels, which as a result is why there is currently still limited data on the strength of each support level’s price level.

Also, keep an eye on whether or not the gap from last week begins to fill, as well as where their RSI is at during any declines in the near-term.

Keeping an eye on where prices are as it begins approaching the neutral level, as well as if it begins to revert back towards overbought conditions will be key in figuring out near-term market direction.

SPY has support at the $540.47 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $531.35 (Volume Sentiment: NULL, 0:0*), $522.92 (Volume Sentiment: NULL, 0:0*) & $520.47/share (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) price levels, with resistance at the $548.35/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100 gained +0.21%, faring the worst of the major four index ETFs.

Their RSI is still overbought at 71.79, but it is trending back towards neutral, while their MACD is still bullish but showing signs of weakening & a bearish crossover this coming week.

Volumes were -27.21% below average last week compared to the previous year’s average (33,217,150 vs. 45,637,118), which is still weak even aside from the shortened trading week’s impact.

Monday started similarly for QQQ as it did for SPY, as a wide range session kicked off the week on an advancing note.

Tuesday also was similar to SPY, when the lowest volumes of the week nudged the index ETF slightly higher, although QQQ’s resulted in a doji candle, indicating hesitancy & indecision on the part of market participants.

Thursday resumed with bearish sentiment as a bearish engulfing candle let the leg down on a declining session & paved the way for Friday’s declines on the highest volume of the week, as folks wanted risk-off into the weekend.

Friday’s candle indicated that there is even more uncertainty on the horizon, as it resulted in a spinning top for the session.

QQQ has moved in a more similar manner to SPY than the other indexes, and as a result it has the same things to be keeping an eye on this week.

The impending MACD crossover’s actual declines hinge on the strength of the 10 DMA’s support, which is currently <1% from QQQ’s price.

Their next support level is ~4% below their current price, with another ~2% to go until another support level is found (including the 50 day moving average).

Also, like SPY, keep an eye on the RSI of QQQ as it begins a near-term decline, noting how price is behaving as it approaches the neutral level, which will happen should the gap from last week begin to fill.

QQQ has support at the $475.78 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $460.58 (Volume Sentiment: NULL, 0:0*), $449.34 (Volume Sentiment: NULL, 0:0*) & $448.30/share (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) price levels, with resistance at the $486.86/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

IWM, the iShares Russell 2000 ETF climbed +0.82% last week, mostly due to Monday’s bullish session that set the stage for the rest of the week.

Their RSI is currently at 45.95, trending up towards the neutral 50 mark, while their MACD is still bearish, but beginning to show signs of a potential bullish crossover of the signal line in the near-term.

Volumes were -13.64% below average vs. the prior year (29,124,000 vs. 33,725,106), which were the closest to normal of the major index ETFs.

IWM’s week started off with a wide-range session that spurred the rest of the week’s advances, but the low volume was unable to get it close enough up to test the strength of the 10 or 50 day moving averages.

Tuesday opened higher & tested back into Monday’s range before charging at the 10 & 50 DMA’s resistance, only to get rejected & sent back down to close for a daily gain.

Tuesday’s candle’s long upper shadow does not paint a strong case for the bulls, as despite is showing slight upside appetite, it clearly echoes that there are still more bears in the pool.

Thursday opened lower than Tuesday & ultimately rallied higher to break above the 10 & 50 DMAs’ resistance temporarily, before declining on the day’s session, including some testing lower towards the midway point of Monday morning’s candle’s real body.

Friday wound the week down with a hint of indecision, as the day advanced +0.23% with a spinning top candle, indicating that there is hesitancy on the part of market participants & confirming the strength of the 10 & 50 DMAs’ resistance.

Friday did however have the highest volume of the week for IWM, confirming that there was no appetite to go retest the 10 & 50 DMAs in the near-term.

Given that IWM trades more in a back & forth oscillation than the steep ascending indexes like SPY & QQQ they have more local support levels to help keep their prices up in the near-term.

This week will be focused on seeing if IWM makes another run at the 10 & 50 DMAs’ resistance, particularly as their 200 DMA is ~5% from their current price to the downside, which will cause some pressure to be placed on IWM’s price in the coming weeks.

In the event that IWM does not break for the upside it will most likely continue forward much in the manner it has traded recently, a further consolidation range where the price is walked along by the 10 & 50 DMAs from above.

In an outright decline there are many support touch-points nearby that can help slow losses & control the decline, making it worth reviewing the table below that shows the strength of the price levels IWM has traded at over the past 1-2 years.

IWM has support at the $198.60 (Volume Sentiment: Buyers, 2.47:1), $198.35 (Volume Sentiment: Buyers, 2.47:1), $197.41 (Volume Sentiment: Buyers, 3.38:1) & $196.05/share (Volume Sentiment: Buyers, 3.38:1) price levels, with resistance at the $200.84 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $201.24 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $203.68 (Volume Sentiment: Buyers, 1.08:1) & $204.40/share (Volume Sentiment: Buyers, 1.83:1) price level.

DIA, the SPDR Dow Jones Industrial Average ETF advanced +1.49% last week, having the strongest week of the major four index ETFs despite the continued low volume woes.

Their RSI is just above the neutral level at 57.54 & has flattened, while their MACD is bullish, but muted.

Volumes were -28.11% lower than the previous year’s average last week (2,513,525 vs. 3,496,240) as there was not a high rate of participation among investors.

DIA advanced during every session last week, beginning on Monday when a low volume day produced a wide-range candle, much like SPY, QQQ & IWM.

It should be noted that Monday’s session broke & stayed above both the 10 & 50 day moving averages.

Tuesday showed a bit of uncertainty as the session was also low volume & resulted in a doji, although it was able to remain above the support of the 10 DMA.

Thursday tested the 10 DMA’s support before rallying up for another wide-range candle on the highest volume of the week.

A key difference between Monday & Wednesday is the length of the candles’ shadows, as both the upper & lower shadow are larger on Thursday’s candle than Mondays.

This indicates that there is less conviction moving into these higher price levels & that neither the bulls nor the bears are completely in control & there is a bit of sentiment for prices to move in either direction at this level.

Friday confirmed this by resulting in a doji candle, indicating that there was a bit of indecision heading into the weekend.

This week will be interesting to see if they can continue higher towards the $397.13/share level, which would possibly set up a head & shoulders pattern in DIA.

In the event that they reach that high it will be beneficial to review where their RSI is at that time, as that will give insight into whether they make a run at their all-time high at $399.83 or if they’ll cool back off & consolidate.

Otherwise, to the downside they do have a fair amount of support near-by & the 10 & 50 DMA’s strength of support will be key to watch.

DIA has support at the $391.04 (Volume Sentiment: Buyers, 1.08:1), $390.24 (Volume Sentiment: Buyers, 1.08:1), $388.01 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) & $386.47/share (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) price levels, with resistance at the $397.13 (Volume Sentiment: NULL, 0:0*) & $399.83/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

The Week Ahead

Monday the week kicks off with Fed Governor Waller speaking in Rome at 3 am, followed by San Francisco Fed President Daly speaking at 2pm.

There are no noteworthy earnings reports scheduled for Monday.

Fed Governor Bowman speaks at 7am Tuesday morning in London, followed by S&P Case-Schiller Home Price Index (20 Cities) data at 9 am, Consumer Confidence at 10 am & Fed Governor Cook speaking at 12 pm.

Tuesday morning TD Synnex is scheduled to report earnings, with Fed Ex, Progress Software & Worthington Enterprises due to report after the session’s close.

Wednesday morning at 10 am New Home Sales data is released.

General Mills, Paychex & UniFirst report earnings before Wednesday’s opening bell, with Micron Technology, AeroVironment, Concentrix, H.B. Fuller, Levi Strauss, MillerKnoll & Worthington Steel all scheduled to report after the session’s close.

Initial Jobless Claims, GDP (second revision), Durable-Goods Orders & Durable-Goods minus Transportation data are released Thursday at 8:30 am, with Pending Home Sales data after them at 10 am.

Acuity Brands, Apogee Enterprises, Lindsay, McCormick & Company, Simply Good Foods & Walgreens Boot Alliance all report earnings before the opening bell on Thursday, with Nike & Accolade due to report after the session’s closing bell.

Friday is the busiest day of the week on the data front, beginning with Richmond Fed President Barkin speaking at 6 am, Personal Income (nominal), Personal Spending (nominal), PCE Index, PCE Year-over-Year, Core PCE Index & Core PCE Index Year-over-Year at 8:30 am, Chicago Business Barometer (PMI) at 9:45 am, Consumer Sentiment (final) at 10 am & Fed Governor Bowman speaking at 12 pm.

There are no major earnings reports scheduled for Friday.

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 ***

SPY, the SPDR S&P 500 ETF added +1.64% this week, as the volume drought continued for a sixth consecutive week.

The VIX closed the week at 12.66, implying a one day move of +/-0.80% & a one month move of +/-3.66%, although both of those numbers seem extreme if volumes continue to be so low (I am on vacation & this portion was written before Monday’s open, but I’m not editing it).

Their RSI is currently overbought at 73.14 & has flatlined in the wake of the consolidation period post-gap up over the past few days, while their MACD extended pointing bullish, but the histogram isn’t signaling extreme strength.

Volumes were -42.39% below average compared to the year prior (42,408,078 vs. 73,612,610), as it appears global warming has even caused a severe 6 week volume drought for the major index ETFs.

Monday opened the week up on a bullish & optimistic note, despite having the weakest volumes of the week & the session closed in a bullish engulfing day-over-day pattern that closed in the top 25% of the prior Friday’s candle’s upper shadow.

The cautious, yet optimistic sentiment carried on into Tuesday, when the session opened at the midway point of Monday’s candle’s real body, checked lower but was supported by the 10 day moving average (which it didn’t test fully) before trending higher to close the day in an advance.

Tuesday’s volumes were also on the lower end of the spectrum last week for SPY, indicating there was still a bit on uneasiness in markets as participants waited for both Wednesday’s CPI announcement & FOMC interest rate announcement.

This is where things took a turn for the interesting for SPY & QQQ in particular (QQQ will be reviewed next), as the CPI report forced SPY to open on a gap up on Wednesday morning & run up higher until about 10:30 am, before settling into a trading range.

Around 1:30 pm SPY began to experience declines in the run-up to Powell’s rate announcement & at 2pm continued lower.

SPY continued to bounce around in that range during Powell’s press conference until near the end when from 2:50-3:15 pm it rallied higher before dumping for the rest of the afternoon & into the close after Powell finished speaking.

This led to the day’s close being lower than the session’s open, on the highest volume of the week.

Given the hawkish nature of the Fed announcement & the dot-plot this appears to be the precursor to a further move downward in the coming weeks.

It is worth noting that 21% of the dot plot currently calls for 0 rate cuts in 2024, which is an increase of 100% from the March meeting.

Additionally, ~53% of the dots from March’s meeting have moved from 3-4 cuts in 2024 to 0,1 or 2 cuts.

In addition to the 0 cuts gaining +100%, it appears as one cut may be the most likely in 2024, as the dots for one cut increased by +250%, while the dots for three cuts only increased by 60% from March’s reading.

This will be something to keep an eye on moving into the second half of the year, especially while trying to navigate the timing estimates of said cuts that folks are saying on the financial news.

It’s also worth noting that Wednesday’s price action & the subsequent consolidation range following the gap up pushed SPY’s RSI into overbought territory.

Thursday brought along the PPI report, which also was slightly better than what was anticipated by markets, yet SPY didn’t seem properly convinced that things are improving.

This makes sense though, as one thing that is not often discussed when the impact of rate hikes has been brought up is how long it took for the desired impacts to take place since they began in March of 2022.

With this in mind, it is something to think about every time you hear someone utter the phrase “higher for longer”, as it’s been ~2.25 years since this process began & it is highly unlikely that this will be as simple as putting ice melt out on your driveway & seeing everything immediately melt away.

While Thursday’s volume was the second highest of the week, it’s still not particularly convincing that there will be folks eager to hop back into the pool in the near-term, particularly when looking at the broader market breadth.

Thursday ultimately opened on a gap up, tested much lower, but ultimately closed on the higher end of the day’s range, but below the opening price level.

This is another indication of market participant hesitancy & reason to take caution in the near-term.

Friday opened lower, tested slightly lower, but was ultimately able to close in a +0.06% advance going into the weekend, which when combined with the low volumes is really not much of a bullish sentiment.

SPY’s Average True Range began the week perking higher as discussed would happen last week, however the gap up of Wednesday’s session caused it to go back to where it began the week.

There are many Fed speakers next week, along with data coming out on the manufacturing front & homebuilding front which will likely play an impact on the week’s overall performance.

It seems that there are more potential downward catalysts in the week ahead than upward ones, but time will tell.

For the past few weeks we have stressed the importance of the relationship of the price to the 10 & 50 day moving averages, which will still be a factor in the week ahead.

However, the window that was created by Wednesday’s gap up will be an area of more interest, as while it provides some support in the near-term that is even closer to the price than the 10 DMA, it is also likely to be filled based on the low participation levels shown by volumes over the past 6 weeks.

While the gap has provided adequate support so far based on the lower shadows of the last three candles of the week, there will be more tests to come of this in the week ahead & the low volumes suggest that many market participants are looking for a reason to abandon ship in the short-term.

Adding further uncertainty to this is that most of the trading at the more recent high price levels has been on such light volume that sentiment analyses of SPY’s most recent price levels produce little signals & data, making it difficult to gauge the strength of the local support levels.

With this in mind, it is best to err to the side of weakness in the near-term when assessing the strength of these support levels, given that there is such little volume in the price ranges SPY has been at recently.

Should the window begin to be filled, it is likely the support of the 10 day moving average will be broken to the downside, making the $533.06 level important in hopes that it can create enough support for a near-term head-and-shoulders pattern using Wednesday’s new all-time high as the headpiece.

SPY has support at the $535.87 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $533.06 (Volume Sentiment: NULL, 0:0*), $524.61 (Volume Sentiment: NULL, 0:0*) & $519.79/share (50 Day Moving Average, Volume Sentiment: Buyers, 2.5:1) price level, with resistance at the $544.12/share (Volume Sentiment: NULL, 0:0*) price level.

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100 advanced +3.51% for the week, having the best week of the major index ETFs as NVDA’s +9.09% weekly gain powered the 100 stock component index higher than SPY’s more diluted 500 stock index.

Their RSI is currently overbought at 78.64, while their MACD is bullish, but beginning to look to be extended due to lack of volume.

Volumes were worse than SPY’s though, coming in at -45.38% below average compared to the previous year (25,243,192 vs. 46,219,182), as it’s beginning to look like QQQ needs to start offering free pizza with purchase in order to drum up participation.

As we’ve been saying for the last handful of weeks, QQQ & SPY have been trading similarly due to their having NVDA & other semiconductor/AI-focused names as component stocks, which has caused them to perform much more strongly than IWM & DIA, both of which have limited to no exposure in those areas/names.

Monday kicked the week off on a similar bullish note for QQQ as SPY had, where a bullish engulfing candle set the week up for advances, although on the weakest volume of the week (also much like SPY).

Tuesday the advances continued, as did the weak volume (second weakest of the week).

Wednesday’s news events created a gap up situation for QQQ as well, also on the week’s highest volumes, which resulted in a candle with a longer upper shadow than lower shadow, indicating that bulls were not in control, but that there was some appetite to keep pushing higher.

QQQ’s RSI crossed into overbought conditions on Tuesday, leading SPY by a day.

Thursday had a rather ominous tone to the day, as the second highest volumes of the day had a dreary, yet slightly bullish result.

Prices gapped higher on the open as a result of the CPI, FOMC & PPI information releases, but tested much lower during the day to around the neighborhood Wednesday closed in, before staging a slight recovery to still close below the day’s open.

Friday resulted in a bullish engulfing candle & a new all-time high for QQQ, but with the subdued volume levels, high RSI & stretched MACD it is not feeling as bullish as it may normally.

Much like SPY, QQQ’s Average True Range began the week advancing until the gap up session of Wednesday turned it around.

This week will also turn QQQ’s focus onto the strength of the window created on Wednesday’s support, as well as if their 10 day moving average will be of much help should it cross over into the zone before prices reach that low.

The small real bodies of the candles of the past week are another indication that things are not necessarily doing ok under the hood for QQQ & that there is still a great deal of indecision in the air around them.

Many of the concerns regarding the strength of sentiment in support for SPY are also applicable to QQQ & will be areas to keep an eye on moving into the coming week.

QQQ has support at the $466.03 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $460.58 (Volume Sentiment: NULL, 0:0*), $449.34 (Volume Sentiment: NULL, 0:0*) & $444.89/share (50 Day Moving Average, Volume Sentiment: Buyers, 3.67:1) price level, with resistance at the $479.26/share (All-Time High/Friday’s High, Volume Sentiment: NULL, 0:0*) price level.

IWM, the iShares Russell 2000 ETF had the worst week of the major four index ETFs, declining -0.95%.

Their RSI is currently at 42.04 & trending lower towards the oversold level of 30 as a result of the consolidation that began in the middle of May, while their MACD is bearish & steadily trending lower away from the signal line, due to the nature of the consolidation range being so stretched out.

Volumes were bad, but better than the other three index ETFs, ending the week only -9.13% below the year prior’s average volume (30,758,209 vs. 33,848,256), making IWM the most actively traded of the major four index ETFs this past week (it’s a participation trophy, but we’ll give it to them).

Monday opened on weak volumes an a bullish engulfing candle, much like SPY & QQQ & set the stage for a week of advances.

Tuesday had different plans however, when a bearish harami pattern emerged during the lowest volume session of the week.

It’s worth noting that this was the lowest volume day of the week, as the session was able to close higher than it opened, despite being a declining session.

This signals that the move was not based off of any actual meaningful strength & that sentiment for IWM was still to the downside.

Wednesday is where things became interesting, as prices gapped higher on the open, tested even higher to the range that IWM traded in’s high from two weeks ago, before ultimately testing much lower & closing lower.

The good news was that the 10 day moving average was just as strong that day as a support level as it has been as a resistance level for the past few weeks.

The next day is where Wednesday’s subtle weakness was confirmed though, as prices gapped lower, broke through the 10 day moving average’s support, before dropping below the 50 DMA’s support & recovering to close just above the 50 DMA.

Thursday’s volume was the third highest of the week, indicating that this pivotal move was relatively supported by market participants & that there is still quite a bit of hesitancy among market participants to dive back into the small cap dominated index.

Friday came through with confirmation of this, when prices gapped lower, made a weak attempt higher, before testing much lower & closing down -1.59% for the day heading into the weekend.

IWM’s Average True Range has behaved differently than SPY & QQQ’s & has continued higher this past week, again likely due to their lack of NVDA & other semiconductor/AI name relevance.

This is going to be an area to keep an eye on in the near future, as these names can’t keep the entire S&P 500/NASDAQ 100 afloat forever & the challenges that IWM & DIA have faced over the past few weeks are likely to occur to SPY & QQQ except much worse as their prices have continued higher irrationally while the other two indexes have taken time to breathe.

As we’ve outlined before, the more range-bound oscillating trading style of IWM has it in the comfort of many local support levels, which will help soften any further declines.

IWM’s 10 day moving average looks primed to bearishly cross their 50 DMA which will queue further near-term declines.

This will be an area to keep a close eye on, but even more important will be to monitor what occurs with SPY & QQQ when this occurs, as they may either continue flying higher while IWM suffers, and or that movement may be the catalyst that begins to let some air out of the balloons & cause folks to take profits from their positions in them.

IWM has support at the $198.60 (Volume Sentiment: Buyers, 2.47:1), $198.42 (Volume Sentiment: Buyers, 2.47:1), $198.35 (Volume Sentiment: Buyers, 2.47:1) & $196.05/share (Volume Sentiment: Buyers, 3.38:1) price level, with resistance at the $201.51 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $201.98 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $203.68 (Volume Sentiment: Buyers, 1.08:1) & $204.40/share (Volume Sentiment: Buyers, 1.83:1) price levels.

DIA, the SPDR Dow Jones Industrial Average ETF dipped -0.52% for the week, further distancing itself from the recent returns of SPY & QQQ & sending signals of weakness to investors & traders.

Their RSI is trending down from the neutral level & sits at 44.84, while their MACD is bearish & looking primed to continue downward for the coming week.

Volumes were -21.91% below average last week vs. the previous year (2,748,875 vs. 3,520,004), as market participants have not been overly eager to jump back into the markets & are more content with taking a breather.

Monday was the only bullish day of the week for DIA, however the bullish engulfing candle came on extremely light volumes which indicated that there was little strength behind the short term bullish signal.

Tuesday began to signal more weakness when the session opened lower, tested below the support of the 10 & 50 DMAs & ultimately closed slightly above its open, but still for a declining daily session.

Wednesday was where the real trouble began though, as the session opened on a gap up following the CPI print, but investors were no enthused about the FOMC decision & pushed prices much lower throughout the day, settling atop/just at the 10 & 50 DMA’s support levels.

This was confirmed Thursday when the session opened & tested lower again, but ultimately closed as a doji on a declining session right at about the 50 DMA’s support on the second lowest volume of the week.

Market participants were eagerly participating on profit taking during these two sessions, which is a theme that will likely carry over into this week for DIA.

Friday confirmed the weakness when prices gapped lower on the open & tested a bit lower before closing above their open, but still down -0.11% for the day.

DIA’s Average True Range has also been declining since Wednesday’s session, but based on their other indicators it looks like volatility will continue to perk up throughout this week.

As outlined many times previously, DIA & IWM have begun trading in a much more of a range-bound style than SPY & QQQ who have advanced at rapid rates over the past seven months, which gives the former more local support levels.

It will be interesting to see how strong the resistance of the 10 & 50 day moving averages are on DIA’s price this week, as well as to see if the emerging bearish head & shoulders pattern actually comes to fruition & what impact that would have on the other major three index ETFs.

It will also be imperative to see if there are any volume spikes & in which direction they occur over the coming week, as this may prove to be indicative of future near-term price movements.

DIA has support at the $385.02 (Volume Sentiment: Sellers, 1.25:1), $384.90 (Volume Sentiment: Sellers, 1.25:1), $383.23 (Volume Sentiment: Buyers, 2.67:1) & $380.41/share (Volume Sentiment: Buyers 2.67:1) price level, with resistance at the $387.06 (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1), $387.09 (Volume Sentiment: Sellers, 1.25:1), $387.84 (10 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) & $391.11/share (Volume Sentiment: Buyers, 1.08:1) price level.

The Week Ahead

Monday kicks off with the Empire State Manufacturing Survey data at 8:30 am, followed by Philadelphia Fed President Harker speaking at 1pm.

La-Z-Boy & Lennar are both scheduled to report earnings after Monday’s closing bell.

U.S. Retail Sales & Retail Sales minus Autos are released at 8:30 am on Tuesday, followed by Industrial Production & Capacity Utilization data at 9:15 am, Business Inventories & a Richmond Fed President Barkin interview at 10 am, St. Louis Fed President Musalem speaks at 1:20 pm, Chicago Fed President Goolsbee speaks at 2pm & the day closes with Dallas Fed President Logan speaking at 2:30 pm.

Tuesday morning’s pre-market earnings reports include America’s Car Mart, Cognyte Software & Patterson Companies, with KB Home announcing their results after the session’s close.

Wednesday’s primary area of focus will be the Home Builder Confidence Index at 10am.

Steelcase is scheduled to report earnings on Wednesday.

Initial Jobless Claims, U.S. Current Account, Housing Starts, Building Permits & the Philadelphia Fed Manufacturing Survey data are all released Thursday at 8:30 am.

Thursday morning begins with Darden Restaurants, Accenture, Commercial Metals, GMS, Jabil, Kroger & Winnebego all reporting earnings before the opening bell, with Smith & Wesson Brands reporting after the session’s closing bell.

Friday the week winds down with S&P Flash U.S. Services PMI & S&P Flash U.S. Manufacturing PMI data at 9:45 am, followed by Existing Home Sales & U.S. Leading Economic Indicators data at 10 am.

CarMax & FactSet Research Systems will report earnings before the opening bell on Friday morning.

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 ***

SPY, the SPDR S&P 500 ETF advanced +1.26% this past week as they continued to enjoy the NVDA stock split mania, while the VIX closed the week at 12.22%, implying a one day move of +/-0.77% & a one month move of +/-3.53%.

Their RSI is 64.46 after trending close to the overbought level but decreasing over the past two sessions, while their MACD is still bullish but looking weak & like it is ready for a bearish crossover in the coming week.

Volumes were -47.06% below average for the week compared to the year prior, continuing the tumbleweed trend for a fifth consecutive week (39,364,990 vs. 74,350,735).

This lack of volume for such a long time is becoming a bit concerning, with the coming week’s CPI, PPI & Fed-Funds Rate decision likely going to be the catalyst to increase volumes, be it to the upside or downside.

Monday began the week on a note of uncertainty, as the session gapped up to open above the 10 day moving average, only to test to the downside below the open of the previous Friday’s open & recovered to close just below/in-line with the 10 DMA.

This was on the second highest volume of the week, indicating that there is some severe downside sentiment in the market, both by how low the day’s range tested & by the fact that the day closed lower than it opened, which is another signal of limited cofidence.

Tuesday opened on a gap down & tested lower, although not as low as Monday & ultimately was able to test above the 10 DMA, although it closed about in-line with it.

The limited volume of the day (second lowest of the week) indicates that there was not much faith in the price advance & that market participants are still weary of prices being around the 10 day moving average.

Things got interesting on Wednesday, as SPY was able to gap up to open above the 10 DMA, but while the 10 DMA’s support held up, it was tested & the upside testing beyond the day’s closing level was minimal.

This led into Thursday’s narrow gap up open that ultimately tested lower & resulted in a doji candle, indicating uncertainty as investors tread water waiting for new developments to send SPY higher or lower.

The low volume on the doji should also be noted, as it showed market participants were relatively content with where SPY was priced, while also showing some hesitancy to continue marching higher.

This was confirmed by Friday’s session, where a new all-time high was reached temporarily, but the open & close of the day’s sessions were concentrated near the bottom of the day’s candle, which was also a doji (although its body was a bit thicker than the day prior’s.

SPY’s Average True Range declined a bit (we had anticipated it continuing higher) due to the first three sessions of the week, but in the wake of Thursday & Friday’s declines it should be primed to edge higher as volatility looks set to increase this week.

This week’s main events will be Wednesday & Thursday between CPI, the FOMC interest-rate decision & PPI data being released & markets are already eagerly awaiting their next direction based on the results of these announcements.

Rates will most likely remain unchanged & the “higher for longer” narrative will likely be repeated, which would cause the 10 DMA’s support to give out again, at which point all eyes will shift to the 50 day moving average.

There are two other support levels between the 10 & 50 day moving averages currently, but given that one was established six sessions ago it is likely not going to be strong, especially with how close the 50 DMA is to it.

The 50 DMA test will more than likely result in a declining move through it, which would then open up SPY to further declines due to sparse support levels following their aggressive run up that began in October of 2023 & the $510.75, $501.94, $499.55 & $493.86 price levels would then be the next key support levels of focus.

Until then, expect rangebound activity & a consolidation for the beginning of the week within the confines of Wednesday’s candle’s real body on muted volumes.

In the event of any upside moves (for SPY, as well as the other index ETFs below) in the near-term, unless they’re accompanied by strong volumes they should be viewed with caution based on current market sentiments.

SPY has support at the $533.06 (Volume Sentiment: NULL, 0:0*), $529.49 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $524.61 (Volume Sentiment: Even, 1:1) & $518.36/share (Volume Sentiment: Buyers, 2.5:1) price levels, with resistance at the $536.89/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100 advanced +2.72% last week, having the strongest week of the major four index ETFs.

Their RSI is just beneath the overbought level of 70 & is currently at 67.21 after brushing up against the overbought mark, while their MACD is slightly bullish, but looking feeble & ready to keel over for a bearish crossover in the coming days.

Volumes were -41.33% below average vs. the year prior (27,451,313 vs. 46,787,963), as market participants are extremely cautious about entering into new positions & are worried about the outcome of the three key events mentioned above.

This low volume should also be noted as if there is any type of miss or bad data released it will spark investors into action, most likely to all hop out of the pool & take their profits with them from the run up QQQ has enjoyed since October of 2023.

QQQ’s week looked very similar to SPY’s, which makes sense given that they’ve both been driven by NVDA’s success, while IWM & DIA have not as it is not a component of either index.

Monday kicked QQQ’s week off on an erie note, as the session gapped higher on the open to just below the 10 day moving average’s resistance, poked higher temporarily, but ultimately tested low on the downside to well below the prior Friday’s close & closed for the day lower than the open.

This was the week’s second highest volume session of the week as well, indicating that there is more bearish than bullish sentiment in the near-term for QQQ.

Tuesday had a similar story, opening above Monday’s close, but testing lower before poking its upper shadow above the 10 DMA only to close right below it.

The session’s weak volume should be noted as it indicates that there was a bit of uncertainty among market participants & an overall reluctance to go above the 10 day moving average’s resistance.

Wednesday’s move to the upside then became more questionable, as despite having the highest volumes of the week, the levels were so muted that it is hardly meaningful from a sentiment perspective compared to their average volumes.

They opened above the 10 DMA, tested below it, but ultimately continued higher & established a new all-time high.

It should be noted however that there was no upper shadow on the day’s candle, which means that the day’s closing level was one of the highest points it traded at all day, indicating that there is not much appetite for QQQ to advance beyond that level in the near-term.

Much like SPY, expect to see QQQ kick off this week in a consolidation range based on the real body of Wednesday’s candle in the run-up to this week’s big data announcements mid-week.

Thursday set the tone for this with a slight gap higher than ultimately closed in declines with a lower shadow indicating that there was more downward sentiment than upward at these levels & an indecisive spirit was confirmed by the lowest volume of the week.

This continued Friday as the session opened on a gap lower, tested higher to reach an new all-time high, but ultimately closed as a gravestone doji, indicating that the sentiment now for QQQ is bearish, which should be expected to continue into this week.

Much like SPY, QQQ’s 10 & 50 DMAs will continue to be areas to watch this week, as should the support of the 10 DMA be broken there will likely be a follow up test of the 50 DMA, as there are only two support levels between the two moving averages, one of which was established a week ago from Friday.

The index can continue to float higher if the AI & semiconductor names continue to be strong, but it appears that market participants are already taking their feet off of the gas pedal in recent weeks & are looking for a reason to take profits in the near-term, which may be delivered to them mid-week.

QQQ’s Average True Range also began to fall this past week due to the first three sessions, but it appears ready to continue climbing in the coming week amid rising volatility.

Due to this, it is important to have an idea as to how strong QQQ’s nearby support levels are in the event that they are retested soon.

QQQ has support at the $460.58 (Volume Sentiment: NULL, 0:0*), $457.37 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $449.34 (Volume Sentiment: NULL, 0:0*) & $443.05/share (Volume Sentiment: Buyers, 1.3:1) price levels, with resistance at the $465.74/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

IWM, the iShares Russell 2000 ETF fared the worst of the major index ETF this week, declining -2.22% as small cap stocks continued their consolidation that began in May.

Their RSI is trending below the neutral level of 50 & currently sits at 44.56, while their MACD is still bearish following the crossover that occurred in mid-May.

Volumes were -33.08% below average compared to the prior year (22,737,264 vs. 33,975,688), as market participants await this week’s data announcements before making any further decisions on where to place money.

AS previously mentioned, IWM & DIA have broken off from the performance of SPY & QQQ recently due to the former not having NVDA as components.

This has led to the consolidation range that we have been seeing since May.

This should be concerning for the other indexes as it highlights that there is a lot of conflicting sentiment in the market right now.

Monday began on a gap higher than ultimately went below the 10 day moving average’s support to test the 50 DMA, which was able to hold up.

The price settled back up near the 10 DMA, but the session resulted in declines on modest volume.

Tuesday the bears were out in full force, as the week’s highest volume came from a session that opened on a gap down, failed to break the resistance of the 10 DMA on a test run & then crashed through the support of the 50 DMA & closed the day below it.

Wednesday was able to close above the 10 DMA barely, but the downside movement that IWM took during the day & the low volume despite wide trading range expose some cracks in the strength of IWM.

Thursday confirmed this with a bearish harami pattern emerging & a close to below the 10 DMA, which led to Friday’s gap down session that was unable to stay above the 50 day moving average’s support.

The theme of uncertainty was also revealed in Friday’s session as the candle ended the day as a spinning top on the lower range of the day’s prices & the gap up from early may began to be filled.

IWM’s Average True Range plateaued, but looks set to continue climbing with an increase in volatility this upcoming week.

Due to the relatively tight range that IWM has traded in since December of 2023 there are many local support levels in relation to its current price which will be beneficial for it in the event that we see SPY & QQQ begin to correct.

In the event that the $195.89 support level is broken the $191.34 & the 200 day moving average of $190.83/share will be key areas to focus on, as otherwise IWM looks set to establish a new range in the $180’s.

IWM has support at the $199.16 (Volume Sentiment: Buyers, 2.47:1), $198.90 (Volume Sentiment: Buyers, 2.47:1), $196.60 (Volume Sentiment: Buyers, 3.38:1) & $195.89/share (Volume Sentiment: Buyers, 1.06:1) price levels, with resistance at the $202.55 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $203.89 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $204.25 (Volume Sentiment: Buyers, 1.83:1) & $204.97/share (Volume Sentiment: Buyers, 1.83:1) price level.

DIA, the SPDR Dow Jones Industrial Average ETF tread water for the week, adding only +0.25% as investors sit unsure of what the next move should be while awaiting this week’s data announcements.

Their RSI is flat just below the neutral level & sits at 48.75, while their MACD is bearish currently, but has also flattened over the past week which will be something to keep an eye on moving into this week.

Volumes were -27.3% below average last week compared to the previous year (2,559,354 vs. 3,520,545) confirming that there is a great deal of indecision in the market, but it should be noted that last week’s highest volume session by a long-shot was Monday’s declining day.

Prices opened just above Friday’s close that day, were unable to break the 50 day moving average & instead tested lower, almost all the way to the Friday’s close before settling in what appears like a giant hanging man candle.

Tuesday was a bit more optimistic, DIA opened on a gap lower but was able to rally & temporarily cross through the 50 DMA’s resistance before closing just below it for an advancing session.

Things got interesting for DIA on Wednesday, when the day opened above both the 10 & 50 day moving averages, tested below both & wound up closing in a dragonfly doji just above them both.

While dragonfly dojis are typically indicative of a potential bullish reversal, the low volume levels & depth to the downside that the session tested are not a cause for optimism which the rest of the week echoed.

Thursday was another muted volume session that resulted in a spinning top on a high wave candle, indicating that there was no general consensus of where DIA was to be valued for the day.

The 10 & 50 DMAs were both support in relation to the day’s price range, but the open & close (real body portion of the candle) are concentrated closer to the lower end of the candle, indicating that there is more bearishness at these price levels than bullishness.

Friday confirmed this as well, as another weak volume session resulted in a spinning top (narrow body though, but too wide to be a doji) was able to test above Thursday’s high, but ultimately also tested near the low of Thursday as well before settling down lower for the day & “the range of indecision”.

While the close was above the support of the 10 & 50 day moving averages, the low volumes make it extremely difficult to see a bullish case in this situation.

In the event that there is one, there is a double top/emerging head & shoulders pattern with marks at the $398.02 (left) & $400.72/share price levels, which to see broken would require some serious market moving news, such as an FOMC rate cut.

DIA’s Average True Range has plateaued in recent days as there has not been much volatility, but that should perk up as this week progresses & volatility rises.

It will be impossible to not watch the 10 & 50 day moving averages this week, given that they’re just below DIA’s price & are sitting atop one another.

Due to this, in the event of a downside breakout all eyes should be on how resilient the $375.78-$378.19 support zone is, as if it crumbles the 200 day moving average is the only line of defense ($366.68) paired with the $368.91/share support level before the rapid advances of November & December 2023’s price range gets encroached, where there is no support for -4.22%.

Any upside moves right now should be viewed with caution, unless they’re accompanied by high volumes.

DIA has support at the $387.45 (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1), $387.30 (10 Day Moving Average, Volume Sentiment: Sellers, 1.25:1), $387.09 (Volume Sentiment: Sellers, 1.25:1) & $385.02/share (Volume Sentiment: Sellers, 1.25:1) price levels, with resistance at the $391.11 (Volume Sentiment: Buyers, 1.08:1), $398.02 (Volume Sentiment: Buyers, 0.6:0*) & $400.72/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

The Week Ahead

The week begins on Monday on a quiet note with no economic data announcements scheduled.

Monday’s earnings reports feature FuelCell Energy & Lovesac before the opening bell, with Calavo Growers & Yext reporting after the session’s close.

Tuesday begins at 6 am with the NFIB Optimism Index data.

Academy Sports + Outdoors reports earnings results Tuesday morning before the bell, followed by Oracle & Casey’s General Stores after the closing bell.

Much anticipated Consumer Price Index, CPI Year-over-Year, Core CPI & Core CPI Year-over-Year data is released at 8:30 am on Wednesday, followed by the FOMC Interest-Rate Decision, Monthly U.S. Federal Budget data & Fed Chair Jerome Powell Press Conference all at 2pm.

Wednesday afternoon features earnings reports from Broadcom, Dave & Buster’s Entertainment, Oxford Industries & Torrid after the session’s closing bell.

Thursday features Initial Jobless Claims, Producer Price Index, Producer Price Index Year-over-Year, Core PPI & Core PPI Year-over-Year data all at 8:30 am.

Korn Ferry, Signet Jewlers, Veradigm & Wiley are all due to report earnings results on Thursday morning before the opening bell, with Adobe scheduled to report after the close.

The week winds down with Import Price Index & Import Price Index minus Fuel data at 8:30 am, followed by Consumer Sentiment (prelim) data at 10 am & there are no noteworthy earnings reports due.

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***

SPY, the SPDR S&P 500 ETF lost -0.39% last week, as the ghost-town volumes continued for another week, while the VIX closed out the short week at 12.92, implying a one day move of +/-0.81% & a one month move of +/-2.36%.

Their RSI was trending back towards neutral until Friday’s session boosted it back in the direction of overbought & currently sits at 57.55, while their MACD is bearish after crossing over on Thursday.

Volumes were yet again underwhelming for a fourth consecutive week, as SPY’s weekly volume was -27.34% below average compared to the year prior (54,558,375 vs. 75,091,843).

While it was a short trading week, these numbers are still very low, especially given how Friday’s volume eclipsed all of the volumes seen in the past month/month & a half.

Monday was Memorial Day in the United States & so the market wasn’t open, leaving the honors of opening the trading week to Tuesday.

Tuesday barely managed to stay positive, closing in a dragonfly doji on the weakest volumes of the week.

Given that last Thursday’s bearish engulfing candle had a very wide range & Tuesday’s candle remained inside of it, it was not exactly the vote of confidence market participants were hoping for.

Another area of concern included that the support of the 10 day moving average was temporarily broken on Tuesday, despite SPY rallying back to close above the 10 DMA.

The closing price was lower than the open though, which is another cause for concern, especially on such light volumes.

While Friday of last week did set a bullish harami two day pattern, it was proven to be weak as Wednesday saw a gap down session on stronger volume than Monday’s, but still severely lackluster levels compared to the rest of the previous year.

One glimmering area of hope for SPY on Wednesday came in the form of despite the gap down day, the close was slightly higher than the opening price level.

This was quickly erased on Thursday, when another gap down open occurred & pushed prices even further below the resistance of the 10 DMA.

Volumes were still subdued on Thursday, but slightly higher than the prior two days, which brings us to Friday’s interesting price action.

Firstly, as noted previously, Friday had the highest volumes of all sessions for almost the past month & a half for SPY.

The candle that the day resulted in is an interesting one though, as it came out in the form of a hanging man (bearish) with a very long lower shadow.

Prices opened just below the open of Thursday & proceeded to test well below all of Thursday’s range & broke below the $520/share range temporarily, as seen by the lower shadow.

Although the session proved to be an advancing day & a run at the 10 day moving average’s resistance was made, it was unable to reach, indicating that there is still quite a bit of downside sentiment.

As last week’s note pointed out for IWM & DIA, SPY has now entered into a range in the little bubble between the 50 Day Moving Average’s support & 10 Day Moving Average’s resistance.

This tends to be indicative of further near-term declines on the horizon & will be something to keep an eye on in the coming week.

SPY’s Average True Range perked up as last week’s note anticipated, and we expect it to continue into the near-term as volatility looks ready to increase further.

It would also be prudent to keep a keen eye on volume sentiments as the 50 day moving average begins to be tested, as an uptick in volumes there will likely be a great indicator of where market participants are ready for SPY to go.

In the event that the 50 DMA is breached another key area of focus will be the $510.75/share mark, where sellers have historically outperformed buyers at a ratio of 2.31:1 over the past 1-2 years, as this gate is the last area keeping SPY from heading towards the gap that in the $505-510 range, as well as the one in the $500-502 range.

The $510.75/share support is also where the 50 DMA rejected price advances on a session that resulted in a hanging man candle at the end of April, which is not a particularly reassuring signal of strength.

Last Thursday’s candle remains the upside target if the 10 DMA resistance is broken, but there appears to be more pain to come in the coming week for SPY & an increased chance of declines.

SPY has support at the $524.61 (Volume Sentiment: Even, 1:1), $516.64 (50 Day Moving Average, Volume Sentiment: Buyers, 2.5:1), $510.75 (Volume Sentiment: Sellers, 2.31:1) & $501.94/share (Volume Sentiment: Sellers, 3.5:1) price levels, with resistance at the $528.20 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $533.06/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.

QQQ, the Invescco QQQ Trust ETF that tracks the performance of the NASDAQ 100, declined -1.58% in the short trading week, faring the worst of the major four indexes after being the leader of the prior week’s performance.

Their RSI is currently 56.78, while their MACD is bearish in the wake of the past few days of declining sessions.

Volumes were also very low for QQQ, finishing at -24.47% below average vs. the year prior’s average (35,643,100 vs. 47,192,452), which despite the four day trading week is still very low.

It is worth noting that Friday also had the highest volume of the week for QQQ, however it was on a “declining” session where QQQ dropped-0.00%, losing $0.02/share, which will make for an interesting sentiment attribute moving into next week.

Tuesday opened on an advancing note, however the day’s candle was a hanging man & set the stage for the rest of the week’s declines.

Tuesday managed to keep some hope for bulls alive as the strength of the 10 day moving average prevailed & propped prices up above it, where a declining open resulted in a test higher & an ultimate higher close than open for QQQ.

Tuesday had the weakest volume of the week, followed by Wednesday & Thursday.

Thursday is where we saw QQQ re-align to a degree with SPY, IWM & DIA, as last week’s note pointed out how there was a divergence in index performance between SPY & QQQ who have NVDA as a component & IWM & DIA who do not.

Thursday opened just above the 10 DMA, tested slightly higher based on the small upper shadow, but in the end broke to the downside, breaking the key support level to close ~1% below it.

This made for an interesting Friday, where the session opened near the low range of Thursday’s session’s candle body, tested down -1.92% to the low of the day, before closing two cents lower for the day at $451.53.

While the session resulted in a dragonfly doji which tends to signal a reversal is imminent, that’s not likely the case for QQQ this week.

Much like SPY above, QQQ is now in the area between the resistance of the 10 DMA that is moving downward applying pressure to price, while above the 50 DMA which is moving towards price as support.

QQQ is in luck though, as due to its more steady price progression there are more support levels locally in relation to its price compared to SPY, but these may not be as strong as holders think & could become problematic, particularly if there is a rug-pull profit taking move on NVDA & the other semiconductor stocks that are QQQ components that have been experiencing strength of recent.

Much like IWM & DIA last week & SPY above, now we wait to see if QQQ manages to maintain its position squeezed between the two moving averages & establishes a new consolidation range, or if the 50 DMA will give out & prices crash to the downside.

In the unlikely event that prices do ultimately pop up in the near-term, last Thursday’s high of $460.58/share is the target area to be keeping an eye on (all-time high).

It appears more likely to see a test of the downside though given the relationship to prices & the 10 & 50 DMAs, which is where attention should be placed this coming week.

QQQ has support at the $449.34 (Volume Sentiment: NULL, 0:0*), $445.99 (Volume Sentiment: Buyers, 3.67:1), $440.35 (50 Day Moving Average, Volume Sentiment: Buyers, 1.3:1) & $438.56/share (Volume Sentiment: Buyers, 1.32:1) price levels, with resistance at the $454.90 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $460.58/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.

IWM, the iShares Russell 2000 ETF had the strongest weekly performance of the major index ETFs, advancing +0.16%.

Their RSI is at 53.46 & trending back towards overbought after the gains of the past two sessions, while their MACD is bearish but the signal line could be broken bullishly in the event that the 10 day moving average’s resistance does not hold up.

Volumes were very low for IWM as well, coming in at -34.2% below average compared to the year prior (22,595,850 vs. 34,337,848), which even when the loss of Monday trading is factored in still signals a sluggish participation rate among investors.

IWM opened the week off Tuesday with gap up to the 10 day moving average in the footsteps of a bullish harami pattern formed the previous Friday.

However, the open was about the best part of the day, as it declined on the lowest volume of the week after that, testing near the prior day’s lows had been when looking at the candles’ lower shadows.

Things took an uglier turn on Wednesday, with a gap down session that barreled through the 50 day moving average’s support at the open & ended the day on an indecisive note with the session’s candle being a doji.

One thing that was certain was that market participants were overwhelmed by the resistance of the 50 day moving average, as the session remained below it all day & the volumes were at the second highest level of the week.

Thursday was a bit more optimistic, but still negative, as prices gapped back above the 50 DMA, tested its support to the downside & were able to rally higher, but the candle’s real body was concentrated in the lower half of the day’s range & volumes were lackluster compared with other sessions last week.

Friday was reckoning day, as the open gapped higher, tested lower covering the range between the 10 & 50 DMAs before heading back up to break the resistance of the 10 day moving average temporarily & closing 10 cents lower than the resistance level on the week’s highest volume.

IWM’s Average True Range has been increasing slowly over the past weeks & looks to continue to do so as more volatility appears to be on the horizon.

As we enter a new week all eyes will be on which direction prices get squeezed into as the 10 & 50 day moving averages begin to constrict the consolidation range that IWM has established over the past few weeks.

If prices can’t settle for a session above the 10 DMA, it appears the near-term following movements will be to the downside.

Fortunately, due to its more rangebound trading nature IWM has many support touch-points nearby in the event of the decline, and it will be interesting to see which ones hold up as the strongest.

IWM has support at the $204.97 (Volume Sentiment: Buyers, 1.83:1), $204.25 (Volume Sentiment: Buyers, 1.83:1), $202.89 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) & $201.78/share (Volume Sentiment: Buyers, 1.08:1) price levels, with resistance at the $205.73 (10 Day Moving Average, Volume Sentiment: Buyers, 1.83:1), $209.77 (Volume Sentiment: Buyers, 2.75:1), $209.88 (Volume Sentiment: Buyers, 2.75:1) & $211.88/share (52-Week High, Volume Sentiment: Buyers, 2.75:1) price levels.

DIA, the SPDR Dow Jones Industrial Average ETF fell -0.8% last week, which was set to be a steeper decline until Friday’s +1.55% session saved their week.

Their RSI is trending up towards the neutral 50 level & sits at 46.55, while their MACD is currently bearish following the declines of the past two weeks.

DIA’s volume was actually relatively high compared to the other index ETFs, coming in at only -3.28% below average compared to the year prior (3,426,550 vs. 3,542,864).

Much like IWM, DIA’s past week decoupled from the performance of the NVDA holding indexes SPY & QQQ & began to show signs of weakness.

Tuesday opened the week up on a gap down that straddled the 50 day moving average’s support, briefly breaking below it, before closing right in line with it, although on low volumes.

Wednesday saw investors showing more pessimism, as DIA gapped down again below the 50 DMA & closed the day as a spinning top candle, indicating that there is still a great deal of uncertainty among market participants.

Thursday may have been the most important day of the week for DIA though, where the second highest volume session of the week resulted in third consecutive gap down & a long-legged doji candle.

This is important for two reasons: 1) the long-legged doji is a signal of uncertainty among market participants overall & 2) because the open & close were so close to one another it can be viewed as market participants finding that price level to be “equilibrium” between bears & bulls.

If buyers & sellers are still uncertain of DIA’s proper value, but agree that it is near $380.41 currently then this suggests that there is further downside movement on the horizon.

While Friday’s wide-range session to the upside was on the highest volume of the week, it should not be interpreted as a bullish signal as it was unable to test the resistance of the 50 day moving average.

It was able to place their RSI a bit higher in the wake of the declines of the week & change prior, but given the angle of their 10 & 50 day moving averages there appears to be a bearish crossover on the cards for this coming week which would result in further downside movements.

DIA’s Average True Range continued to climb higher as the week was marked with heavy volatility & this should continue into the coming weeks.

This week will be time to watch how DIA’s price consolidates within the range of Friday’s candle, or if it continues its downwards slide.

With the 10 DMA closing in on the 50 DMA there should be some additional downside movement this week as a result of that impending crossover.

This is also beginning to look like a bearish head & shoulders set up is forming, which will be something to keep in the back of your mind as we navigate the next few weeks.

This is confirmed by the shapes of the 10 DMA, RSI & the MACD.

Fortunately for DIA their prices have been relatively rangebound in the past few months which has set them up with many support levels nearby.

As their 200 DMA inches higher it will also be important to keep an eye on the $368.91/share price level, which is currently the last support level before prices enter the range of the long bullish run up from November & December of 2023.

DIA has support at the $387.09 (Volume Sentiment: Sellers, 1.25:1), $385.02 (Volume Sentiment: Sellers, 1.25:1), $383.23 (Volume Sentiment: Buyers, 2.67:1) & $380.41/share (Volume Sentiment: Buyers, 2.67:1) price levels, with resistance at the $388.08 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $391.11 (Volume Sentiment: Buyers, 1.08:1), $391.70 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) & $398.02/share (Volume Sentiment: Buyers, 0.6:0*) price levels.

The Week Ahead

Monday kicks the week off with S&P Flash U.S. Manufacturing PMI data at 9:45 am, followed by Construction Spending & ISM Manufacturing data at 10 am & Auto Sales data.

CIBC & Science Applications are scheduled to report earnings before Monday’s opening bell, with GitLab due to report after the session’s close.

Factory Orders & Job Openings data are announced at 10 am on Tuesday.

Tuesday opens up with Bath & Body Works, Core & Main, Designer Brands, Donaldson Company & Ferguson reporting earnings before the bell, with CrowdStrike, Guidewire Software, Hewlett Packard Enterprise, PVH, Sportman’s Warehouse, Stitch Fix & Verint Systems due to report after the session’s close.

Wednesday begins with ADP employment data at 8:15 am, U.S. Productivity (final revision) & U.S. Trade Deficit data at 8:30 am, S&P Flash U.S. Services PMI at 9:45 am & ISM Services data at 10 am.

Brown-Forman, Campbell Soup, Dollar Tree, Hibbett, Ollie’s Bargain Outlet, REV Group, Thor Industries & United Natural Foods are all due to report earnings before Wednesday’s opening bell, with Lululemon Athletica, ChargePoint, Couchbase, Five Below, Greif, Semtech, Smartsheet, Sprinklr & Victoria’s Secret scheduled to report earnings after the session’s close.

Initial Jobless Claims data is released at 8:30 am on Thursday.

Thursday’s earnings start off with ABM Industries, Big Lots, Ciena, G-III Apparel, J.M. Smucker, Nio & The Toro Company before the opening bell, with Argan, Braze, DocuSign, Mission Produce, Samsara, Vail Resorts & Zumiez reporting earnings after the closing bell.

Friday winds the week down with U.S. Employment Report, U.S. Unemployment Rate, U.S. Hourly Wages & Hourly Wages Year-over-Year data at 8:30 am, followed by Wholesale Inventories at 10 am & Consumer Credit at 3pm & there are no noteworthy earnings reports scheduled.

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 ***