Visualizing The Performance Of The VIX Vs. SPY Over The Past Year

The CBOE Volatility Index is often referred to by investors & market pundits as “fear & greed index”, as it provides a view of future volatility in the near-to-mid-term that is reported as an annualized figure.

At a high level, it is calculated as a measure of at & out-of-the-money S&P 500 index options put & call contracts for the next two standard expiration dates that have over eight days until their expiration (up until there are two consecutive strike prices with no posted bid-ask pricing).

The midpoint of the bid-ask spread for the nearest at-the-money options in the series is then used to ultimately create a forward price for a synthetic option for the S&P 500 & the implied volatility of the synthetic option is what is quoted as the VIX on television & in newspapers.

The implied volatility is an annualized estimate of how much the price of the underlying security (in this case the S&P 500’s synthetic option) may move based on how market participants are currently buying & selling the security.

With this in mind, it can be inferred that there is a strong link between optimism/pessimism related to the S&P 500’s performance & the VIX reading, as more options tend to be traded when investors need protection from volatility (buying puts or selling out-of-the-money calls) leading to a higher VIX reading when the S&P 500 declines.

Using SPY as a proxy (the S&P 500 ETF) the relationship between the VIX reading, daily SPY changes & changes in trading volume will be examined in the following article.

Note that the date range used for historic data was 7/10/2023 to the closing data of 7/9/2024, resulting in 251 sessions of usable data (given that the one-day implied S&P 500 move based on a VIX closing price is a reflection of tomorrow’s change, not that same day’s closing price).

Examining The Relationship Between The VIX, SPY & Daily Volume

The closing VIX reading for 7/10/2023 was 15.07, while SPY’s closing price that day was $433.595, implying that SPY would close within a range of +/-0.95% on 7/11/2023 (30 Day/1 Month implied move of +/-4.36%).

The following day SPY closed at $436.36, a change of +0.64%, meaning that it fell within the VIX’s predicted one day implied volatility.

SPY’s volume increased by 3.24% day-over-day, with 7/10/2023’s volume being 62,443,500 & 7/11/2023’s volume being 64,463,800.

As mentioned above, there were 251 total session’s used in this article (as it began being written before 7/10/2024’s close).

The VIX proved to be a fairly accurate calculation, as 81.3% (204 sessions) of the time in the past year the price of SPY closed within the range of the VIX reading, with 18.3% of the time (47 sessions) SPY outperforming it to the upside or the downside (recall that the VIX does not provide a direction of the movement, just the magnitude of it).

81.3% Of The Past Year's Sessions The VIX Has Correctly Anticipated The Range Of Movement Of SPY For The Next Day's Session, While 18.7% Of Sessions SPY Closed Outside Of The VIX's One Day Implied Price Range
81.3% Of The Past Year’s Sessions The VIX Has Correctly Anticipated The Range Of Movement Of SPY For The Next Day’s Session, While 18.7% Of Sessions SPY Closed Outside Of The VIX’s One Day Implied Price Range

When looking at it from the perspective of a five day trading week, over the past year each week had about four days where SPY closed within the VIX’s predicted range, with roughly one day per week where it closed with a higher variance level than the VIX indicated (recall that it is predicting that moves will come in either direction, up or down).

When we isolate the times that SPY closed above or below the reading that the VIX implied, we find that 76.6% of the time (36 sessions) SPY had higher volumes than the previous day.

This would be expected, as often more volatile sessions are accompanied with higher trading volume, leaving 11 sessions (23.4%) occurring on days where the day-over-day volume change was lower than the day before.

In 76.6% Of Sessions In The Past Year When SPY Closed Outside Of The VIX's Predicted One Day Range SPY's Day-over-Day Volume Was Higher Than The Previous Day
In 76.6% Of Sessions In The Past Year When SPY Closed Outside Of The VIX’s Predicted One Day Range SPY’s Day-over-Day Volume Was Higher Than The Previous Day

The average volume that SPY traded at during the time outlined above was 71,520,866.27, making it worth digging into how each sessions’ average volume fared in relation to SPY’s performance & the VIX.

In total, 111, or 44.2% of all days traded above that average volume quoted above, while 140 sessions (55.8%) traded below it.

For the sessions where SPY traded at a greater daily variance than what was predicted by the VIX, 80.85% of sessions (38) occurred on volumes that were above the annual average.

19.15% of sessions (9) where SPY traded outside of the predicted range of the VIX occurred on sessions with below average volume.

Looking at days where SPY closed within the range that the VIX predicted things look quite different, with only 35.8% of sessions (73) having above average volume & 64.2% of sessions (131) occurring with lower than average volume.

This can in part be explained by the dramatically larger sample size & the nature of the calculation, but was worth examining to see how the numbers fell in line with the other data points listed.

Comparing The One-Day Returns Of SPY Relative To The VIX's One-Day Implied Range Of S&P 500 Movement In Relation To Each Session's Volumes Vs. The Annual Average Volume
Comparing The One-Day Returns Of SPY Relative To The VIX’s One-Day Implied Range Of S&P 500 Movement In Relation To Each Session’s Volumes Vs. The Annual Average Volume

Tying It All Together

As we can see, the VIX does a pretty solid job of predicting the one day range that SPY prices will land in the following day.

While the performance may change if we changed the range to more than one year, 251 sessions is significant enough to draw conclusions from.

One thing to note is that while there has been some volatility in that sample size, the largest peak to trough drawdown was -9.5%, so expanding the sample size to include more years with greater volatility would likely change the results (such as past 2022, when there was a -26.6% decline peak to trough at the beginning of the year).

This is something that should be kept in mind in the event that there is increased volatility compared to the past year if referencing these results.

It is certainly something to keep in the back of one’s mind when watching intra-day sessions that have volumes that are higher than average out of the gate at the open/by midday, although other nearby candles & possible pattern formations should also be assessed before using it to make live predictions.

As always, this is not intended to be financial advice, just some observations about past market performance.

*** THIS IS NOT INTENDED TO SERVE AS FINANCIAL ADVICE, BUT RATHER AN ANALYSIS OF PAST MARKET BEHAVIOR – AS ALWAYS, DO YOUR OWN DUE DILIGENCE BEFORE PARTICIPATING IN FINANCIAL MARKETS ***

Weekly Stock & ETF Market Review 7/7/2024

SPY, the SPDR S&P 500 ETF gained +1.91%, as weak volumes continued to plague the major index ETFs, while the VIX closed the week out at 12.48, implying a one day move of +/-0.79% & a one month implied move of +/-3.61%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

Volumes were well below average for the ninth consecutive week, coming in at -46.16% below the year prior’s average volume (38,725,950 vs. 71,930,498), which as we’ve noted each week is an area of increasing concern.

Despite the Fourth of July holiday & the half day trading session on the third reducing the week by ~30% there was still frothy light volume for now the ninth consecutive week.

While it is summertime, the low levels are still indicative of fear & reluctance to dive into markets while most of major indexes sit near all-time highs.

Monday signaled that the week ahead was likely in line with most peoples’ expectations, weak volume, but advancing.

A dragonfly doji set the stage for SPY to climb for the rest of the week, although the open & close were relatively in line with the 10 day moving average, which while it indicates that there is some strength in it as a support level, should be a cause of concern.

The rest of the week (which again, was 70% of a regular week in terms of the hours the market was open) continued to climb above the 10 DMA, but on volumes that looked more like the attendance at a kindergarten soccer game vs. a publicly traded ETF following the S&P 500.

Their RSI has climbed back into overbought territory after the surprise advances of the past week & currently sits at 76.97, while their MACD has crossed over bullishly, but is still tightly hugging the signal line.

While folks will say there is a stronger trend when candles are covering a wider range (particularly with little to no shadows), there is very little conviction behind the recent price movements.

This upcoming week has limited data releases aside from the CPI/PPI prints on Thursday & Friday, but earnings season is revived with the first of the big banks scheduled to report on Friday.

Indicators & oscillators suggest that the time for a mid-summer cool off is upon us, and the biggest question for most right now is what’s going to cause it?

JPM’s chart’s evening star pattern seems to think so (per Sunday night reading, vacation time so this won’t be published until Wednesday PM) & bank stocks control the spigot that supplies the market hose (also hat tip to Jaime Dimon as this may be the first time a weekly post has featured an individual stock name).

JPM's Technical Performance Over The Past Year
JPM’s Technical Performance Over The Past Year

Not much has changed in terms of what to look at for SPY from last week’s note given the nature of how it traded & on the shorter time frame.

While they managed a new all-time high, the amount of conviction & sentiment behind the move was minimal at best & it appears that we’re skating on thin ice.

Based on the prolonged low volumes (9 weeks now), it is hard to imagine much of a catalyst given where markets stand now that would be able to power SPY & co. much higher in the near-term.

As noted last week, it’s still more of a question of whether we have a small consolidation or outright correct.

Volatility decreased slightly last week, but again, not much has changed from last week in terms of what to keep an eye on.

SPY has support at the $546.86 (All-Time High, Volume Sentiment: NULL, 0:0*), $531.35 (Volume Sentiment: NULL, 0:0*), $528.50 (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $522.92/share (Volume Sentiment: Even, 1:1) price levels, with resistance at the $555.05/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100, had the strongest week of the major four index ETFs, advancing 3.56%.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

Their RSI has also trended into overbought territory & is currently 76.64, while their MACD has crossed over bullishly in the past week.

Volumes were -45.52% below the year prior’s average volume (24,538,100 vs. 45,038,444), as much like SPY & the other major index ETFs, everybody’s moved.

The primary difference between QQQ’s chart & SPY’s chart is the hammer candle from Monday’s session.

This indicated more conviction behind the move higher, contributing to QQQ being the strongest performing major index ETF of the four.

With the fluffy volume last week’s primary areas to look at are all still in play, perhaps we learn that last week was a silent squeeze.

For those that missed last week’s note, the strength of the 10 day moving average will set the stage for the next 3-4 weeks for QQQ & SPY.

The new all-time highs only make the declines more troubling, given that the primary support level is the 10 DMA, which is moving higher by its nature & becoming more decoupled from the regular price point support levels.

There is next to no volume strength at these levels, making a consolidation easily able to turn into a more serious decline.

CPI/PPI aren’t necessarily what market participants are holding in as high of regard for an inflation read vs. PCE, so what happens during earnings calls starting Friday will likely be what queues an issue, as it seems unlikely that folks have been holding out this much eagerly anticipating earnings reports to dive back into the pool.

For last week’s post & the areas to continue watching see here.

QQQ has support at the $482.99 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $459.85 (Volume Sentiment: NULL, 0:0*), $457.65 (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) & $448.63/share (Volume Sentiment: NULL, 0:0*) price levels, with resistance at the $496.60/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

IWM, the iShares Russell 2000 ETF had the worst week of the major four index ETFs, declining -1% for the week.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

Their RSI is trending downward from the neutral level & sits currently at 47.35, while their MACD has been bullish, but remains tightly hugging the signal line due to the recent consolidation range IWM has traded in.

Volumes were -46.43% below average compared with the year prior (17,881,775 vs. 33,382,304), as even the small cap index can’t escape the lazy summer participation.

As has been noted every week for some time now, IWM & DIA charts have decoupled from SPY & QQQ for a while now, as AI names & other major tech components of the former indexes have helped keep them moving higher, while the former have spent more time consolidating.

What becomes more troubling about this is that since early May IWM has been consolidating alongside DIA, while SPY & QQQ have continued marching higher.

In the event of a consolidation or correction in SPY & QQQ, a large question becomes whether that will cause an equal reaction from IWM & DIA, or if it will cause some sort of pivot into their components & they will avoid major losses.

Monday last week began on a bearish note with prices opening mid-way through Friday’s range, testing below the support of both the 10 & 50 day moving averages, before ultimately settling just above the 10 DMA, but below the 50 DMA on the week’s highest volume session.

Tuesday made an attempt to break back above the 50 DMA, but was unsuccessful & closed just beneath it, but cracks were shown in IWM as prices temporarily dipped beneath the 10 DMA as well.

The weakness was confirmed with Wednesday & Friday’s sessions, when on Wednesday prices opened in line with the 50 day moving average before bounding higher to above the 50 day moving average, only to close lower, closer to in-line with the prior day’s close on the weakest volume of the week.

It should be noted that Wednesday was a half-day & should it have been a full session it was possibly going to be the highest volume of the week, but the candle closed as what would have been a shooting star if it occurred in a true uptrend, indicating bearish feeling.

The trouble continued into the close of the week when prices opened on a gap down in-line with the 10 DMA, only to temporarily dip above it before testing far below it & closing beneath the support of the 10 DMA.

The strength of the support zone between $197-198.60 will be a key area of focus in the coming weeks now that prices have broken down beneath the 10 & 50 day moving averages & while we await more meaningful volume to indicate strength of sentiment of IWM traders.

For last week’s post & the areas to continue watching see here.

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) & $195.35/share (Volume Sentiment: Buyers, 1.06:1) price levels, with resistance at the $201.29 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $202.30 (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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

DIA, the SPDR Dow Jones Industrial Average ETF climbed +0.66% last week.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

Their RSI is trending towards overbought (70) & currently sits at 60.18. while their MACD has stayed bullish following their recent consolidation.

Volumes were -38.48% below average compared with the year before’s average volumes (2,144,550 vs. 3,485,855), where it appears investors were doing the bare minimum to keep it afloat above the support of the 10 DMA.

Monday began DIA’s week on a weak outlook, where despite the week’s highest volumes prices were unable to crack above the prior Friday’s high & ultimately closed below where they opened just in-line with the 10 DMA’s support.

Tuesday opened below the 10 DMA, but was able to rally & push higher to close higher, but it should be viewed with a skeptical eye as despite completing the bullish engulfing 2 day pattern, the day’s wide range was not supported by the low volume.

Wednesday came in bearish for DIA, opening higher but showing that there was still more downside appetite than upside, as it tested the support of the 10 DMA, but ultimately closed just beneath Tuesday’s close.

It should be noted that the downside volume on Wednesday was slightly less than the upside volume on Monday, calling into question/further confirming the skeptical eye mentioned regarding Tuesday’s price action.

Friday ended the week on a further note of uncertainty, as the case for the bulls heading into the weekend was that the open-close price action was concentrated at the top of the day’s candle, but the reality of it was that the high of the day failed to break out of the recent high-range & the low of the day broke through the 10 DMA’s support.

The coming week’s performance will hinge upon whether or not that high range can be broken out of & or if the support of the 10 & 50 DMAs will be broken to the downside.

Their recent ascending triangle forming indicates that there is more appetite at the top of their recent trading range, but the lackluster volumes of the past couple of months don’t provide as much confirmation as one would like to see.

For last week’s post & the areas to continue watching see here.

DIA has support at the $392.15 (10 Day Moving Average, Volume Sentiment: Sellers, 3.5:1), $391.04 (Volume Sentiment: Buyers, 1.08:1), $390.24 (Volume Sentiment: Buyers, 1.08:1) & $388.91/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) 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.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

The Week Ahead

Next week begins on a slow note with Consumer Credit data released on Monday at 3pm.

Greenbrier reports earnings on Monday morning before the opening bell.

Tuesday brings us NFIB Optimism Index data at 6 am.

Helen of Troy reports earnings before Tuesday’s opening bell, before SMART Global reports after the close of trading.

Wholesale Inventories data is scheduled to be released Wednesday at 10 am.

Wednesday’s earnings calls include AZZ, PriceSmart &WD-40, all due to report after the closing bell.

Things heat up on Thursday with Initial Jobless Claims, Consumer Price Index, XPI Year-over-Year, Core CPI & Core CPI Year-Over-Year data at 8:30 am, followed by St. Louis Fed President Musalem speaking at 1pm &Monthly U.S. Federal Budget data at 2 pm.

Thursday morning kicks off with earnings from Delta Air Lines & Pepsi Co.

Friday the week wraps up with Producer Price Index, PPI Year-over-Year, Core PPI & Core PPI Year-over-Year data at 8:30 am, followed by Consumer Sentiment (prelim) data at 10 am.

Big bank earnings come back to town Friday, starting with JP Morgan Chase, Bank of New York Mellon, CitiGroup & Wells Fargo, with Fastenal also scheduled to report before the opening bell.

See you back here next week!

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

Weekly Stock & ETF Market Review 6/30/2024

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%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

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.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

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.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past 1-2 Years
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past 1-2 Years

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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

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.

DIA ETF's Price Level:Volume Sentiment Over The Past 4-5 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 4-5 Years

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 ***

Weekly Stock & ETF Market Review 6/23/2024

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%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

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.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

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.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

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.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

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 ***

Weekly Stock & ETF Market Review 6/16/2024

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).

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

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.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

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.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

DIA ETF -  SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

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.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

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 ***

Weekly Stock & ETF Market Review 6/9/2024

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%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

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.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past 1-2 Years
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past 1-2 Years

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.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

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.

DIA ETF'S Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’S Price Level:Volume Sentiment Over The Past 3-4 Years

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***

Weekly Stock & ETF Market Review 6/2/2024

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%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

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.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

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.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

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.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

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.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

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.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

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 ***

Weekly Stock & ETF Market Review 5/26/2024

Is there anybody out there? Hello? A third straight week of bite-sized volumes came & went in a week with numerous Fed speakers & the most anticipated earnings report of the quarter where the S&P 500 & NASDAQ reached new all-time highs.

The Dow Jones Industrial Average joined the ranks of the Russell 2000 & decoupled from having similar recent success as the S&P & NASDAQ, primarily due to the fact that NVDA is not a component of the latter two indexes.

SPY, the SPDR S&P 500 ETF remained flat last week, registering a 0.00% change week-over-week (-$0.01) in a week where the VIX closed at 11.93, implying a one day move of +/-0.75% & a one month move of +/-2.18%.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

Their RSI is rising & trending towards the overbought level, currently sitting at 63.89, while their MACD is bullish but looks like it will have a bearish crossover this week (although the four session week may impact this).

Volumes were -42.48% below average this week compared to the year prior (43,612,160 vs. 75,685,438), as the weak enthusiasm carried on for the third week in a row.

The week kicked off with a session that set the tone for a relatively range-bound performance, opening near Friday’s close, testing higher, before ultimately closing just above where it opened on the second lightest volume of the week.

Tuesday opened just below Monday’s close & wound up closing below the high of Monday’s session; however the session was the weakest volume session of the week, on a third consecutive week of very low volumes compared to the year prior.

Wednesday proved to be the pivot point of the week, forming a bearish harami with Tuesday’s candle & testing to the downside with its lower shadow on the second highest volume of the week.

This led to Thursday, where a wide-range bearish engulfing candle covered almost the entire range that SPY has traded at since 5/15 on the highest volume of the week, while also establishing a new all-time high.

The volume is even more significant as SPY was able to close below the support of their 10 day moving average, which has not happened since May 1, 2024 & is an indication that investor sentiment is waning.

The week wound down on a +0.67% session Friday, which opened at the 10 day moving average, tested lower, before closing up.

Volumes were still nothing to write home about on Friday & the spinning top candle indicates that there is still a great deal of uncertainty among market participants.

SPY’s Average True Range began to perk back up following the volatility of Wednesday & Thursday & should continue to do so into the coming week.

The strength of the 10 day moving average’s support is still going to be a main theme to keep an eye on this week, as it began showing weakness during the most active session by volume this week, indicating that investors were undeterred by it.

As noted in previous weeks, should the 10 DMA be broken there are limited local support touch-points for SPY, which means a breach of the 10 DMA would likely lead to a test of the 50 DMA which is ~3% below Friday’s closing price.

A breakdown of the 50 DMA would likely result in a broader leg downward & would then have downward pressure of the 10 & 50 DMA’s resistance impacting price.

Between Fed speakers, the Beige Book & some earnings reports that will highlight the strength of the lower income consumer there will be plenty of opportunities for a downside test of the 10 DMA to occur again during this shortened holiday week.

SPY has support at the $527.89 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $524.61 (Volume Sentiment: Even, 1:1), $515.71 (50 Day Moving Average, Volume Sentiment: Buyers, 2.5:1) & $501.75/share (Volume Sentiment: Sellers, 3.5:1), with resistance at the $533.06/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100 was the only major index to advance this week, gaining +1.37%.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

Their RSI is trending higher & sits just beneath the overbought level at 68.94, while their MACD is bullish, but is curling over for what looks to be a bearish crossover in the coming week (although the four day week may impact this).

Volumes were -39.9% below average compared to the previous year’s average (28,662,420 vs. 47,688,702), which casts doubt on the strength of their weekly advance, which was powered by NVIDIA’s earnings call & the associated strength in technology names.

QQQ’s week began on a muted note, with a low volume advancing session whose upper shadow indicated that there was a slight bit more room to move higher in the near-term.

Tuesday opened on a cautious note about mid-way through Monday’s total price range, but was able to close the day slightly higher day-over-day, but on lighter volume indicating that there was hesitancy.

Much like SPY, QQQ’s week’s performance was ultimately determined on Wednesday, when another very low volume session resulted in a dragonfly doji, indicating that there may be a reversal, or a continued march higher.

Thursday’s open in the wake of the NVDA earnings report was a large gap up for QQQ, but ultimately resulted in the indication of significant appetite for QQQ’s price to be lower, as the session closed near the low of Wednesday’s session & tested lower on the lower shadow.

Thursday also had the highest volume of the week, indicating that there is extreme discomfort in QQQ’s current price level & that many folks were eager to take profits off of the table quickly.

Also, Thursday set a new all-time high for QQQ, which confirms the profit taking angle & will make it important to keep an eye on this coming week.

Friday opened higher than Thursday’s close, tested lower but ultimately marched higher, forming a bullish harami pattern to close out the week, which will be an area to keep an eye on this week.

Like SPY, QQQ’s Average True Range began to perk up mid-week, which seems likely to continue into this coming week.

QQQ’s 10 day moving average & its relationship to its share price will be something traders are keeping a close eye on this week, as despite the weak volumes of last week, the 10 DMA maintained its strength & was not tested.

There are more local support levels for QQQ than SPY, as we’ve outlined before due to the less steep ascent that they took in the rally from October of 2023 to April of 2024, however due to the performance of many tech names eagerness to take profits may render that irrelevant in the face of a decline.

Along with SPY, the relationship between price, 10 & 50 day moving averages will also be something to keep an eye on in the event of decline, as the results will be similar for QQQ’s price.

QQQ has support at the $452.37 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $449.34 (Volume Sentiment: NULL, 0:0*), $445.99 (Volume Sentiment: Buyers, 3.67:1) & $439.03/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.32:1), with resistance at the $460.58/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

IWM, the iShares Russell 2000 ETF dipped -1.27% last week, as market participants were less enthusiastic about small cap names than other stocks.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

Their RSI is just above the neutral level, sitting at 53.17, while their MACD is bearish following the declines of last week.

Volumes were -39.7% less than the year prior’s average (20,792,280 vs. 34,480,038), which is interesting, given that IWM decoupled from SPY & QQQ’s performance & went largely bearish for the week.

Monday started off on a bearish foot for IWM, with a shooting star candle that included a small lower shadow, indicating that there was further appetite to the downside.

Sure enough, Tuesday gapped down, tested slightly lower, but ultimately was able to gather enough steam to close above where it opened, but still for a declining session.

The low volume of Tuesday’s session was the lowest of the week for IWM, which somewhat mutes the fact that investors did push the price back to above where the session opened, which was confirmed by Wednesday’s decline.

Wednesday’s high wave session’s real body was slightly longer than a traditional spinning top, but nevertheless showed large movements both higher & lower based on the upper & lower shadows.

It also showed a complete breakdown of the 10 day moving average’s support for IWM, which when combined with Thursday’s session paints two interesting pictures.

Thursday the declines continued, opening at first above the close of Wednesday, before nosediving through both the 10 & 50 DMAs on the week’s highest volume.

Prices were able to cover to close above the 50 DMA, leading to a bullish harami with Friday’s +1.08% advancing session, but the volumes are clearly speaking more to the downside in terms of investor preference in IWM.

IWM’s Average True Range began to perk up again after declining all month due to the volatility of the past week & appears ready to continue climbing as the most likely scenarios for IWM in the near-term involve more volatility.

Based on the fact that the 50 DMA’s support ultimately held up, Friday’s candle forming a bullish harami may see a new consolidation range forming for IWM’s prices where they oscillate between the 10 & 50 day moving averages in the near-term while waiting for an upside or downside catalyst.

However, due to the high volumes that pushed the price below the 50 DMA’s support there could also be an uptick in volatility where the 50 DMA is broken through, leading to a leg to the downside.

In the event of the latter, there are a handful of support levels that are local to the 50 DMA & could lead to a continuation of the range that IWM has traded in since December 2024 in the near-term.

The angle which the 10 DMA is curled over at is an area of concern though, and indicates that there will be more declines in the coming week(s).

IWM has support at the $204.97 (Volume Sentiment: Buyers, 1.83:1), $204.25 (Volume Sentiment: Buyers, 1.83:1), $202.74 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) & $199.16/share (Volume Sentiment: Buyers, 2.47:1), with resistance at the $206.92 (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 level.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

DIA, the SPDR Dow Jones Industrial Average ETF had the weakest week of the major four indexes, declining -2.33%, indicating the importance NVDA stock had on markets this week, as it is a component of SPY & QQQ, but not DIA or IWM.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

Their RSI is right along the neutral level at 49.38 after flattening out over the past two sessions, while their MACD is bearish in the aftermath of last week’s declines.

Volumes were -33.42% below average last week compared to the year prior (2,358,500 vs. 3,542,530), as investors were even weary to jump into names of the large cap comprised index & used the broader market volatility to take profits from DIA & its components.

As noted above, last week began to show the divergence between indexes that hold NVDA & indexes that do not, as IWM & DIA drifted further apart from SPY & QQQ.

DIA’s week began on an interesting note, where a low volume session that opened around Friday’s closing level created a new all-time high, before profits were taken & the day resulted in a decline.

Tuesday offered a glimmer of hope, but was still marked with uncertainty when the lowest volume of the week came on DIA’s only daily advance, but the result of the session was one of uncertainty, marked by a spinning top candle.

The rest of the week confirmed this, as Wednesday’s session opened lower, tested above Tuesday’s close, before breaking to the downside, temporarily dipping below the 10 day moving average’s support, but managing to recover to close about in line with the 10 DMA on the second highest volume of the week.

That volume indicated that sentiment clearly lies with more profit taking, which led to Thursday’s wide range decline on the highest volumes of the week, as there was no gain for DIA from the NVDA earnings report on Wednesday night.

Prices settled for the session ~2% below the 10 day moving average’s resistance, hovering <1% above the 50 day moving average’s support.

Friday’s session set up a situation similar to the one just outlined for IWM in terms of where DIA’s price goes from here, as there was more profit taking on a declining session of -0.02%, setting up a sharp downwards angle from the 10 DMA, while prices sit between it & the 50 DMA.

A ~0.5% decline would have DIA sitting atop its 50 DMA, indicating that in the near-term we either will see a consolidation range established within the two moving averages & the body of Thursday’s wide-range candle, or the support of the 50 DMA breaks down & results in a broader move to the downside.

In the case of either instance, there is a chance of the gap from early May being filled in the coming weeks, but in the near-term there does not appear to be much in the way of catalysts to the upside, nor general enthusiasm at these price levels to continue the charge higher.

DIA, like IWM has many local support touch-points, which will also be something to look at & assess as prices fluctuate in the near-term.

DIA has support at the $388.39 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $387.09 (Volume Sentiment: Sellers, 1.25:1), $385.02 (Volume Sentiment: Sellers, 1.25:1) & $383.23/share (Volume Sentiment: Buyers, 2.67:1), with resistance at the $391.11 (Volume Sentiment: Buyers, 1.08:1), $396.11 (10 Day Moving Average, Volume Sentiment: Buyers, 0.6:0*), $398.02 (Volume Sentiment: Buyers, 0.6:0*) & $400.72/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

The Week Ahead

Monday is the Memorial Day holiday in the U.S. so markets will be closed & there will be not economic data nor earnings reports released.

Cleveland Fed President Mester speaks in Japan at 12:55am on Tuesday, followed by the S&P Case-Shiller Home Price Index (20 cities) at 9 am, Minneapolis Fed President Kashkari speaks at 9:55 am & Consumer Confidence data is released at 10 am.

Tuesday morning’s earnings reports include Bank of Montreal, Bank of Nova Scotia, Baozun & Hello Group, with Box, CAVA Group & HEICO scheduled to report after the closing bell.

Wednesday starts late on the data front, with New York Fed President Williams speaking at 1:45 pm, followed by the Fed Beige Book at 2 pm.

Abercrombie & Fitch, Advanced Auto Parts, American Eagle Outfitters, Chewy, Columbus McKinnon, Dick’s Sporting Goods & Royal Bank of Canada are all due to report earnings before Wednesday’s opening bell, with Salesforce, Agilent Technologies, C3.ai, Capri Holdings, Credo Technology Group, HP, nCino, Nutanix, Okta, Pure Storage, Stratasys & UiPath all scheduled to report after the closing bell.

Things pick up on Thursday beginning with Initial Jobless Claims, GDP (first revision), Advanced U.S. Trade Balance in Goods, Advanced Retail Inventories & Advanced Wholesale Inventories at 8:30 am, Pending Home Sales at 10 am & New York Fed President Williams speaking at 12:05pm.

Thursday morning’s earnings calls include Dollar General, Best Buy, Birkenstock Holding, Burlington Stores, Caleres, Cracker Barrel, Foot Locker, Hormel Foods, Kohl’s, SpartanNash & Veradigm, with Dell Technologies, Ambarella, Asana, Cooper Companies, Costco Wholesale, Elastic, Gap, Marvell Technology, MongoDB, NetApp, Nordstrom, SentinelOne, Ulta Beauty, Veeva Systems & Zscaler all due to report after the session’s close.

Friday begins with Personal Income, Personal Spending, PCE Index, PCE (Year-over-Year), Core PCE Index & Core PCE (Year-over-Year) at 8:30 am & the Chicago Business Barometer (PMI) at 9:45 am & Genesco will report earnings before the opening bell.

See you back here next week!

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

Weekly Stock & ETF Market Review 5/19/2024

SPY, the SPDR S&P 500 ETF added +1.65% this past week, while the VIX closed at 11.99 to finish the week, implying a one-day move of +/-0.92% & a one-month move of +/-2.19%, in yet another week of lackluster volumes across the major four indexes.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

Their RSI is nearing the overbought level & currently sits at 68.85 after a week of relative quiet (asides from Wednesday’s gap up session), while their MACD is still bullish, but showing signs of weakening in the near-term.

Volumes were -31.42% below average compared to the year prior (including last week’s “participation trophy week”, 52,530,754 vs. 76,595,337), indicating severe hesitancy on the part of market participants, as it appears the well of enthusiasm has dried up.

This low volume should be particularly alarming, given that most of the sessions of the past two weeks have closed in advances so there is not much conviction behind these moves up.

Monday kicked the week off on a similar note that last Friday wound down the previous week, resulting in a gap up open that tested lower to about mid-way through Friday’s lower shadow, before rallying back to close just above Friday’s close on what was one of the year’s bottom 3 lowest volume sessions.

Tuesday was able to find some stable footing & advance higher, but volumes again were nothing spectacular & folks weren’t just diving back into the fool in masses, as PPI data had just been announced & CPI data was on deck for Wednesday.

Wednesday opened with a gap up with enough enthusiasm to close higher for the day’s session & establish a new trading range for the end of the week, but volumes were still nothing to write home about (although they were the highest of the week for SPY).

Thursday is where the treading water began, which we will likely see continue into the coming week until the highly anticipated NVDA earnings call on Wednesday.

SPY ended Thursday on a bearish & uncertain note, as the session had declining volume that was similar to the advancing volumes of the past two days, on a shooting star candle.

This was to be expected walking into the open & is likely to continue into the coming week, barring there is some major news development in the time running up to the NVDA earnings report (bearish), or a head-fake up to get more people to pile back into the pool on one last pump.

Friday continued this theme, as the second highest volume session of the week ended in a +0.15% advance for the day, resulting in a dragonfly doji, which is a bullish reversal candle.

It also created a bullish harami pattern with Thursday’s candle, however, the session closed below its open & with the poor volume it is hard to read it as being particularly bullish.

SPY’s Average True Range is continuing lower, due to the gap up of Wednesday’s session & general lack of volatility, which we did anticipate would be rising in the near-term (and still do).

The late-July 2023 to November period is still something to be keeping a close eye on, as while the 10 Day Moving Average has recently pulled further ahead of the 50 DMA than it did during that time, this time around a new 52-week (and all-time) high was established.

Support levels for SPY are also in an interesting position as they currently sit, as using the data from the past 1-2 years, the immediate next two support levels do not have enough data yet to establish whether buyers or sellers have been the dominant force & they’re reportedly even (let’s assume buyers have the slight edge due to the nature of where they are currently trading).

The next two support levels are in the $510-514.99/share box, which is historically dominated by sellers at a rate of 2.31:1 & is only a 2.67% decline away from their current trading price from Friday’s close.

A decline of -4.56% would be in the cards if the sellers overtake the first two support levels & carry enough selling momentum from the historic behavior of the $510 range, which will be an area to keep a close eye on in the coming week, especially after the Fed speakers of the week & the NVDA earnings report.

SPY has support at the $524.61 (Volume Sentiment: Even, 1:1), $522.41 (10 Day Moving Average, Volume Sentiment: Even, 1:1), $514.03 (50 Day Moving Average, Volume Sentiment: Sellers, 2.31:1) & $510.75/share (Volume Sentiment: Sellers, 2.31:1) price levels with resistance at the $531.52/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100, advanced +2.19% last week, having the strongest weekly performance of the major four index ETFs.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

Their RSI is near the overbought level, but has backed away from it in the wake of the past two sessions & sits at 65.89, while their MACD is bullish but showing signs of impending weakness in the coming week(s).

Volumes were weak, -29.72% below average vs. the prior year (33,892,137 vs. 48,227,138), indicating that there is still a lot of skepticism about their near-term potential among market participants.

Much like SPY, QQQ has now had back-to-back weeks of subpar volumes as investors sit on the edge of their seats awaiting to see if NVDA’s earnings call can give markets the strength to continue climbing.

Monday saw one of the lowest volume sessions of the year for QQQ on a day where despite gapping higher than the week prior on the open there was minimal strength & a test to the downside & ultimate close lower than the open.

Tuesday saw investors more eager to enter the market both in terms of volumes & the session’s bullish engulfing candle, leading to Wednesday’s gap up session on the highest volume of the week.

From there QQQ became range-bound near the closing price of Wednesday’s session for the rest of the week.

Thursday formed a bearish harami with Wednesday’s candle (bearish) as the real body of the shooting star candle was confined within the real body of Wednesday’s.

Friday confirmed this with more downside action, as the lower shadow of the day’s range tested down ~75% of Wednesday’s candle’s real body, indicating that pessimism has not left the building for QQQ & will likely continue into the new week.

QQQ’s Average True Range has been trending lower & recently crossed its mean as volatility has subsided since April, although it is likely to pick back up this coming week.

As noted in prior weeks, QQQ has more nearby support points than SPY due to the velocity with which SPY climbed over the past 7-8 months, but all eyes will continue to be on the 10 & 50 day moving averages.

If prices are to fall below them, there will be downward pressure from their resistance & given how close they are in the first place it would not take particularly long for them to begin flashing bearish signals.

Another thing to be mindful 0f in the coming few months is in the event of a decline, whether or not a head & shoulders pattern emerges with last week’s new all-time high as the head (or a new high reached this week).

It will also be important to be watching how volume trends change after two weeks with subpar volumes, as well as noting whether the buyers or sellers have been the dominating players at the support levels that QQQ is likely going to test in the coming week(s).

QQQ has support at the $449.34 (Volume Sentiment: NULL, 0:0*), $445.99 (Volume Sentiment: Buyers, 3.67:1), $444.93 (10 Day Moving Average, Volume Sentiment: Buyers, 3.67:1) & $438.56/share (Volume Sentiment: Buyers, 1.32:1) price levels with resistance at the $454.69/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

IWM, the iShares Russell 2000 ETF climbed +1.85% last week, experiencing the same low volumes as SPY & QQQ.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

Their RSI is near the oversold end of neutral, currently sitting at 61.54, while their MACD is bullish but has curled over bearishly & looks primed for a bearish crossover in the coming days.

Volumes were -15.46% below average compared to the year prior (29,329,278 vs. 34,692,386), as market participants were reluctant to buy into IWM for a second straight week.

The week kicked off on a unique & anything but certain note, as one of the lowest volume sessions of the year opened above last Friday’s close, tried to march up to Friday’s high, but ultimately retreated & closed lower.

This resulted in a bullish harami pattern, but given the low volume & the lower close than open it was to be taken with a grain of salt & not a sign of bullish enthusiasm.

Tuesday opened on a gap higher, but ended up closing in confusion & uncertainty as a spinning top candle, on a second straight day of lower closes than opens for IWM.

This lack of conviction among market participants continued throughout the week, as despite gapping higher on Wednesday, IWM closed the day with a hanging man candle, which is a bearish signal.

Thursday & Friday went on to work on closing the gap created by Wednesday’s session, with Thursday being a declining session & Friday resulting in a doji candle, signaling uncertainty going into the weekend.

Friday had the highest volumes of the week, which should also raise a skeptical brow about the strength in IWM currently, given that they closed at the exact price level that they opened on for the day, indicating that investors didn’t have any conviction one way or the other regarding their price.

IWM’s Average True Range has continued to decline in the month of May as volatility has subsided dramatically since April, but their other indicators look like we’ll see an uptick in their ATR in the week ahead.

It’ll be worth keeping an eye on IWM’s MACD this upcoming week & how its 10 day moving average moves in relation to it, as their MACD is showing signs of weakness & if the declines from it begin to pull the 10 DMA down that could set up a decent size swing to the downside.

Much like SPY & QQQ, that downwards move for the 10 DMA would also begin forcing downwards pressure on price if it drops beneath it & would also trigger the same downwards pressure from the 50 DMA in the event of declining below that as well.

IWM has support at the $206.05 (10 Day Moving Average, Volume Sentiment: Buyers, 1.83:1), $204.97 (Volume Sentiment: Buyers, 1.83:1), $204.25 (Volume Sentiment: Buyers, 1.83:1) & $202.54/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) price levels with resistance at the $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 level.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

DIA, the SPDR Dow Jones Industrial Average ETF climbed +1.21% last week, as the large cap index was the least favored among market participants.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

Their RSI is in overbought territory following the advances of the month of May & currently sits at 71.54, while their MACD is bullish, but showing signs of a bearish roll-over on the near-term horizon.

Volumes were -19.6% lower last week compared to the year prior (2,857,738 vs. 3,554,391), in another week of lackluster trading activity.

Monday began DIA’s week with a bearish engulfing candle that almost engulfed the entirety of Friday’s doji’s range.

However, this large downside candle came on weak volumes, adding a layer of uncertainty into the mix & a lack of conviction behind market participants.

Tuesday resulted in an advancing session that created a bullish harami pattern with Monday’s & set the stage for the rest of the week’s advances.

Wednesday’s gap up came in the wake of Tuesday’s harami pattern & it also was the session with the week’s highest volumes, which isn’t a strong sign of conviction given how low volumes were for the week & the week prior.

Thursday brought another all-time high for DIA, but on a bearish note as the day’s session resulted in a shooting star candle, showing that investors did not want to budge over the $400.40/share mark for DIA.

Friday resulted in a relatively range-bound hanging man candle (bearish) on sub-par volumes indicating that there is a bit of bearish sentiment out there among market participants in regards to DIA.

Much like SPY, QQQ & IWM, DIA’s Average True Range has been declining throughout May as volatility has subsided, but it should begin to uptick again in the coming week(s).

DIA’s week will be interesting, as unlike SPY & QQQ NVDA is not a component of DIA.

Most of the same observations for SPY, QQQ & IWM are applicable to DIA in terms of their coming week’s performance & concerns, with the primary ones being the strength of their nearest support levels & how price behaves in relation to their 10 & 50 day moving averages.

Their recent volumes have painted a troublesome picture & it looks as though folks are very hesitant to dive into the pool & are more interested in seeing if it is almost time to jump out to take a break.

DIA has support at the $398.02 (Volume Sentiment: Buyers, 0.6:0*), $394.01 (10 Day Moving Average, Volume Sentiment: Sellers, 3.5:1), $391.11 (Volume Sentiment: Buyers, 1.08:1) & $387.69/share (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) price levels with resistance at the $400.40/share (All-Time High, Volume Sentiment: NULL, 0:0*) price level.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

The Week Ahead

Monday the week kicks off on a sleepy note, with no economic data scheduled to be released.

global-E Online, Li Auto & Wix.com are all scheduled to report earnings Monday morning before the opening bell, with Keysight Technologies, Nordson, Palo Alto Networks & Zoom Video Communications reporting after the closing bell.

Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic & Boston Fed President Susan Collins speak together on a panel on Tuesday night at 7pm.

Tuesday opens up with AutoZone, Eagle Materials, James Hardie, Lowe’s & Macy’s all reporting earnings before the opening bell, with Toll Brothers, Modine Manufacturing, Skyline Champion, Urban Outfitters & Viasat all reporting earnings after the session’s close.

Wednesday brings us Existing Home Sales data at 10 am, followed by Minutes of the May FOMC Meeting at 2pm.

Target, Analog Devices, Brady, Dorian LPG, Dycom, GDS Holdings, Kingsoft Cloud, Petco Health & Wellness, Phontronics, TJX, Vipshop Holdings & Williams-Sonoma all report earnings Wednesday morning before the market opens, with the day’s headliner NVIDIA reporting after the closing bell, along with Enersys, LiveRamp, Snowflake, Sociedad Quimica y Minera, Synopsys, VF Corp & Zuora as well.

Initial Jobless Claims will be reported at 8:30 am on Thursday, followed by S&P Flash U.S. Services PMI & S&P Flash U.S. Manufacturing PMI data at 9:45 am, New Home Sales data at 10 am & Atlanta Fed President Raphael Bostic speaking at 3pm.

Thursday kicks off with BJ’s Wholesale, Endava, Hamilton Lane, KE Holdings, Medtronic, Minro Muffler, NetEase, Ralph Lauren, Shoe Carnival, Titan Machinery, Triumph Group & Weibo reporting earnings before the market opens, followed by Intuit, Lions Gate Entertainment, Ross Stores, StepStone Group & Workday after the closing bell.

Friday winds the week down with Durable-Goods Orders & Durable Goods minus Transportation data at 8:30 am, followed by Consumer Sentiment (final) data at 10 am.

The week ends on the earnings front in the morning when Booz Allen Hamilton, Hudbay Minerals & TransAlta are all scheduled to report earnings before the market’s opening bell.

See you back here next week!

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

Weekly Stock & ETF Market Review 5/12/2024

SPY, the SPDR S&P 500 ETF gained +1.87% last week, while the VIX closed the week out at 12.55, implying a one day move of +/-0.79% & a one month move of +/-2.29% as volatility subsided week-over-week & volumes were well below average for the major four indexes.

SPY ETF - SPDR S&P 500 ETF's Technical Performance Over The Past Year
SPY ETF – SPDR S&P 500 ETF’s Technical Performance Over The Past Year

Their RSI is trending towards overbought levels & currently sits at 62.38, while their MACD is bullish, but beginning to show signs of weakness & will be something to keep an eye on heading into next week.

Volumes were -38.16% below average last week compared to the year prior (47,531,860 vs. 76,858,996), indicating severe hesitancy on the part of investors, as all five sessions of the week were advancing.

Monday’s session kicked off the week on an advancing note, but it should be noted that there was some movement to the downside during the session as seen in the lower shadow of the daily candle.

However, due to the way it recovered & rallied higher it set up the rest of the week to continue climbing, even if only on fluffy light volume.

Tuesday showed signs of blood in the water & the truly uncertain & cautious environment for SPY, as the session gapped higher but was only able to close in a doji candle where the real body was contained in the lower 50% of the daily candle & was filled in, as the close was lower than the open (not a gravestone doji though), that formed a bearish dark cloud cover pattern with Monday’s candle.

Tuesday also accounted for the highest volume of the week, which should signal alarms for market participants given how narrow the day’s trading range was in relation to the rest of the week & should be something to be keeping an eye on heading into the new week.

Wednesday reflected that as SPY opened on a gap down but was able to push higher & avoid forming an evening star pattern (bearish).

This should also be an area of concern as it occurred on the lightest volumes of the week, indicating that there was not particularly strong sentiment behind the move.

Thursday was another very low volume session that advanced over a wider range than Wednesday, which is another checkmark in the “not strength” column.

The week closed out on an ominous note, with Friday’s session resulting in a spinning top candle, indicating indecision among market participants.

Friday was the second highest volume of the week, which in this instance has bearish implications, given that the session opened on a gap higher, tested above the open, but ultimately went lower.

In addition to testing lower, the day also closed below its open which is not indicative of strength & strong belief of market participants.

Their Average True Range is reverting back towards the mid-range as there has been a lack of volatility in the past couple of weeks in the wake of a volatile month of April.

Much like last week, a key area for the week ahead will be how the 10 & 50 day moving averages move in relation to prices for SPY.

They’re currently set up for a bullish crossover during Monday’s session (one year chart), but there doesn’t appear to be much strength & belief in SPY’s prices at these levels.

This makes it worth taking a look on the chart above to back in September of 2023, when SPY had just recovered from a -5.75% tumble, but was unable to reach back to the previous high of two months prior.

Additionally, note the way that the 10 & 50 day moving averages were behaving then.

Peak to trough in the March-April 2024 decline was -5.86% & while the more recent run up to the 52-week (also all-time) high has come closer to reaching the peak than the July-August/September 2023 attempt, volumes have been lower during the climb.

The groundhog saw his shadow then & may well be looking at it again this week, when there are earnings due from Home Depot & Walmart that will shed insight into the state of consumers, in additional to inflation data readings from the PPI (Tuesday) & CPI (Wednesday).

Any weak signals in those reports & data announcements will create a spike in volatility (Average True Range, as noted last week) & likely set up a long couple of months ahead of us for SPY.

This leads us to looking at support levels & the volume sentiment at each over the past 1-2 years, which as shown below do have some strong historic selling sentiment within the next -3-4% lower, where all of SPY’s nearby support levels reside.

It will be another key area to watch heading into next week.

SPY has support at the $512.36 (50 Day Moving Average, Volume Sentiment: Sellers, 2.31:1), $512.06 (10 Day Moving Average, Volume Sentiment: Sellers, 2.31:1), $510.75 (Volume Sentiment: Sellers, 2.31:1) & $501.94/share (Volume Sentiment: Sellers, 3.5:1) price levels, with resistance at the $524.61/share (All-Time High, Volume Sentiment: Even, 1:1) price levels.

SPY ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
SPY ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

QQQ, the Invesco QQQ Trust ETF that tracks the NASDAQ 100, climbed +1.51% last week, also joining SPY with “participation trophy” volumes that were not indicating strong sentiment among market participants.

QQQ ETF - Invesco QQQ Trust ETF's Technical Performance Over The Past Year
QQQ ETF – Invesco QQQ Trust ETF’s Technical Performance Over The Past Year

Their RSI is currently at 58.85 & their MACD is bullish, but beginning to show signs of potentially curling over bearishly in the near-term.

Volumes were a meager -43.08% below average compared to the year prior’s average (27,553,400 vs. 48,404,862), making QQQ the weakest volume of the week among the major four indexes.

Monday showed that the strength of the 50 day moving average’s support was still alive & well, opening just above it, testing lower but ultimately rallying back to close on an advance.

Tuesday looked suspiciously like SPY’s day, with the highest volume of the (weak) week resulting in a doji that closed below the open & in the lower half of the day’s total range.

Things got interesting on Wednesday, where the second lightest volume of the week resulted in a gap down that ultimately was able to work its way up & close higher, albeit on extraordinarily weak volume.

Another particularly interesting point with Wednesday’s candle is that if it was a filled in red real body it would be considered an evening star pattern, which is bearish.

This too is eerily similar to SPY’s situation last week (except SPY advanced that day, while QQQ declined) & while the minor pump into the end of the week was facilitated by Wednesday’s outcome, it still has a bearish sentiment written all over it.

Thursday opened higher, tested well lower into the mid-section of Wednesday’s candle’s real body & resulted in a hanging man candle as it was able to close higher than it opened; it should be noted that this all occurred on the weakest volume of the week.

The volume story for QQQ is similar to SPY, participation trophy levels that don’t add conviction to the moves higher that each index ETF made.

Friday closed the week out doubling down on the notes of uncertainty that we’d seen all week.

Muted volume on a long-legged doji candle that closed below the opening price isn’t a recipe that the bulls tend to want any part of.

Their Average True Range is downtrending back towards the median of its range due to the lack of volatility over the past two weeks, much like SPY’s.

Much like SPY’s timeframe comparison above, it is worth revisiting how QQQ behaved in the July-October 2023 time period.

One notable difference is that QQQ has more support levels nearby than SPY which may prove beneficial for them, particularly as there should be an anticipated pump running up to the NVDA earnings report on May 22, regardless of what this week’s data tells us.

There is also a similar amount of local selling sentiment for QQQ as was the case with SPY, although their past few months’ more rangebound activity than SPY’s does provide a little extra support from buyer-centric volume.

It should be noted though that at extreme price levels like this that data will be skewed towards the buyers, which may make the buyer strength mislead due to a lack of downwards tests for the high price levels.

QQQ has support at the $438.56 (Volume Sentiment: Buyers, 1.32:1), $436.63 (50 Day Moving Average, Volume Sentiment: Buyers, 1.32:1), $434.50 (10 Day Moving Average, Volume Sentiment: Sellers, 2.36:1) & $433.08/share (Volume Sentiment: Sellers, 2.36:1) price levels, with resistance at the $445.99 (Volume Sentiment: Buyers, 3.67:1) & $449.34/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.

QQQ ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
QQQ ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

IWM, the iShares Russell 2000 ETF was the least favorite of the major four indexes last week, adding +1.19% for the week.

IWM ETF - iShares Russell 2000 ETF's Technical Performance Over The Past Year
IWM ETF – iShares Russell 2000 ETF’s Technical Performance Over The Past Year

Their RSI is at 56.8, while their MACD is still bullish but beginning to show signs of weakening in the near-term.

Volumes were -38.76% below average last week compared to the year prior (21,202,560 vs. 34,624,259), as much like SPY & QQQ market participants were not enthusiastic about the leg upward at all.

Monday opened the week up with a move higher on the week’s highest volume, setting the stage for the rest of the week to climb higher.

Tuesday’s gravestone doji candle established that there would not be much more room to run higher for IWM though throughout the rest of the week, which Wednesday confirmed.

Wednesday gapped lower on the open, nearing the 50 day moving average, but the 50 DMA provided adequate support & prices pushed higher to close above their open, but like SPY & QQQ on the weakest volume of the week.

Thursday showed a glimmer of hope for bulls, as there was a move higher for IWM on the week’s second highest volume, however a risk off move into the weekend was in store for Friday.

Friday also showed there was more downside appetite for IWM, as their lower shadow pushed below Thursday’s opening price & midway down Thursday’s lower shadow, indicating that there was more bearish sentiment than bullish for the day.

Their Average True Range is just below the middle of its current range, but is beginning to turn upwards following Friday’s bearish -0.75% declining session & should continue to rise if the volatility persists.

IWM is also resembling the same July-October 2023 period mentioned for SPY & QQQ, but its 10 DMA has come much closer to the 50 DMA recently compared to then, which will be an area to keep a watch on this week.

With that said, IWM will have a bullish 10 & 50 day moving average crossover in the next 1-2 days, pending no large gap downs to open the week, but how long it will be able to rally & stay above the 50 DMA is yet to be seen.

IWM has a good amount of support levels in near-by range which will help them in the event of bad news next week, and unlike SPY & QQQ their next four support levels are all dominated by the buyers over the past 1-2 years.

It is also worth noting that there is a bit of a head & shoulders pattern forming bearishly on IWM’s one year chart, which as you can see prices today are right between the $204.97 level in December of 2023 & the $204.25 level of February 2023.

This looks primed for a bearish surprise in the coming week, unless the buyer strength outlined below at the local support levels is able to hold up & keep IWM propped up.

IWM has support at the $204.25 (Volume Sentiment: Buyers, 1.83:1), $202.30 (50 Day Moving Average, Volume Sentiment: Buyers, 1.08:1), $201.74 (10 Day Moving Average, Volume Sentiment: Buyers, 1.08:1) & $199.16/share (Volume Sentiment: Buyers, 2.47:1) price levels, with resistance at the $204.97 (Volume Sentiment: Buyers 1.83:1), $209.88 (Volume Sentiment: Buyers, 2.75:1) & $211.88/share (52-Week High, Volume Sentiment: Buyers, 2.75:1) price levels.

IWM ETF's Price Level:Volume Sentiment Over The Past 1-2 Years
IWM ETF’s Price Level:Volume Sentiment Over The Past 1-2 Years

DIA, the SPDR Dow Jones Industrial Average ETF advanced +2.17%, as investors favored the larger cap index over the other three major indexes.

DIA ETF - SPDR Dow Jones Industrial Average ETF's Technical Performance Over The Past Year
DIA ETF – SPDR Dow Jones Industrial Average ETF’s Technical Performance Over The Past Year

Their RSI is nearing overbought levels & is currently at 66.09, while their MACD is bullish mostly due to the gap up session of last Friday & the advances that followed.

Volumes were -12.55% below average compared to the year prior (3,105,100 vs. 3,550,743), which while is still weak, is nowhere near as subdued as the levels seen in SPY, QQQ or IWM.

Monday followed in Friday’s footsteps & resulted in a dragonfly doji, although on ~42% of the volume of Friday’s session, which isn’t a signal of strength, but the 50 DMA was able to prove sturdy as support.

Tuesday saw the week’s lowest volume & a session that opened on a gap up, tested higher, before ultimately closing below the opening price; again, not signaling much strength & a clear indication of hesitancy among market participants.

Wednesday was able to muster some folks off of the sidelines for DIA & resulted in a bullish engulfing candle that set the stage for the rest of DIA’s week.

Thursday was the highest volume of the week on a the widest range candle that had almost no shadows, which leads us to the fun part.

Friday’s session had the second highest volume of the week & resulted in a dragonfly doji, which based on the outcome of Monday’s session could translate into a an evening star pattern (both are bearish).

Friday’s range overall was relatively concentrated compared to the rest of the week, which leads market participants to another questions, “Were the last two trading sessions of the week just attempts to get people to jump into the pool to lead to a rug pull next week with more profit?”.

DIA is within ~1% of its all-time high, which if you look closer at from March of 2024 was led up to in the two days prior by two candles exactly like Thursday & Friday’s (although opposite volume configurations).

All eyes will be on Monday’s performance for DIA for more insight into what comes next for it, conveniently leading into Tuesday’s PPI report.

DIA’s Average True Range has been retreating from the high end towards the median of its range due to the decline of volatility over the past 6 sessions, which has in turn shot their RSI up dramatically.

Much like IWM, DIA is not exactly in line with how similar SPY & QQQ were for he July-October 2023 in terms of moving average & performance, which could change if there were a gap down to lead the week off in the first day or two.

Much like every other index outlined above, the story will really come down to the strength of support from the 10 & 50 day moving averages, as well as the volumes for the coming week.

For DIA, there is a chance that even should we receive bad news that they remain more resilient than the other three indexes above due to their components, but as NVDA is not a component they will likely not receive the same gains as SPY or QQQ in anticipation of the NVDA earnings call on 5/22.

There also is the issue of sellers dominating the next four support levels of DIA, and given that two of those are moving averages should DIA find itself decline there will be downward pressure on prices moving into the coming month(s).

There also looks to be a bearish head & shoulders pattern emerging in DIA, which will be an area of concern in the coming week(s).

In the near-term there are plenty of support levels nearby the price, but in the next month-month & a half the $369.46 level will be something to keep on your radar should DIA begin to decline, as aside from the 200 DMA, there is limited support for ~-5% from that support level (also the 200 DMA will continue moving higher day-over-day).

DIA has support at the $395.18 (Volume Sentiment: Sellers, 1.25:1), $387.66 (Volume Sentiment: Sellers, 1.25:1), $387.23 (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) & $386.67/share (10 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) price levels, with resistance at the $398.61/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.

DIA ETF's Price Level:Volume Sentiment Over The Past 3-4 Years
DIA ETF’s Price Level:Volume Sentiment Over The Past 3-4 Years

The Week Ahead

Monday does not have any major economic data to be announced.

Amer Sports, Huya, Paysafe, Tencent Music & Veradigm report earnings before Monday’s opening bell, while Agilysis, Allogene Therapeutics, American Healthcare REIT, Kyverna Therapuetics & StoneCo all are scheduled to report after the session’s close.

NFIB Optimism Index data is released Tuesday at 6am, followed by Producer Price Index, PPI Year-over-Year, Core PPI & Core PPI Year-over-Year data at 8:30am.

Tuesday morning kicks off with earnings from Home Depot, Alibaba Group Holding, IHS Holding, International Game Technology, Jack In The Box, On Holding, Rush Enterprises, Sea Limited, SFL Corp. & Smith Douglas Homes, followed by Boot Barn Holdings, Capital Southwest Corp., DHT, dLocal, Lions Gate Entertainment, Nextracker, Prestige Consumer & Sun Life after the closing bell.

Wednesday is set to be busy, with Consumer Price Index, CPI Year-over-Year, Core CPI, Core CPI Year-over-Year, U.S. Retail Sales, Retail Sales minus Autos & the Empire State Manufacturing Survey data all announced at 8:30 am, followed by Home Builder Confidence Index & Business Inventories data at 10 am.

Arcos Dorados, Dole, Dynatrace, Monday.com & Riskified are all due to report earnings Wednesday morning, with Cisco Systems, Copa Holdings, Grab, Maxeon Solar & ZTO Express all scheduled to report after the session closes.

Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, Housing Starts, Building Permits, Import Price Index & Import Price Index minus Fuel data are all scheduled for release at 8:30 am on Thursday, with Industrial Production & Capacity Utilization data coming out at 9:15 am.

Thursday morning features earnings reports from Walmart, Advanced Drainage Systems, Canada Goose, Deere, Lightspeed, NICE & Under Armour, followed by Applied Materials, Copart, Doximity, DXC Technologies, Flower Foods & Take-Two Interactive Software after the closing bell.

Friday the week winds down with U.S. Leading Economic Indicators announced at 10 am.

RBC Bearings wraps up the week in terms of earnings calls for the week on Friday morning before the opening bell.

See you back here next week!

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