SPY, the SPDR S&P 500 ETF dropped -0.35% for the week, while the VIX closed the week at 18.83, indicating an implied one day move range of +/-1.19%, and an implied one month move range of +/-5.44%.
Their RSI is trending down towards the neutral 50-level, sitting currently at 57.25, while their MACD crossed over bearishly mid-week.
Volumes were +7.45% higher than the prior year’s average (78,824,000 vs. 73,359,365), hinting that there may be some bearishness creeping into markets given that three of the week’s five sessions were declining.
Monday the week kicked off on a note of somewhat muted enthusiasm, as the lowest volume session of the week resulted in a gain of +0.16%.
Tuesday opened higher, but bears stepped in to take profits, forcing SPY lower on the day, with a lower shadow that indicated that there was still downside appetite.
This became evident with Wednesday’s gap down open that managed to break down the support of the 10 day moving average, continued lower, but was able to rally higher to close down -0.49% on the day on the highest volume of the week.
Market participants were clearly beginning to show signs of exhaustion & fear.
Thursday this theme continued, as SPY opened on a gap higher, advanced slightly higher, before declining to close lower than it opened as profit taking & general uneasiness drove market participants into selling.
Friday the week continued to wind down on the cautious note mentioned above, as SPY opened higher, but continued to slide throughout the session, temporarily breaking through the support of the 10 day moving average but closing $0.10 above it.
Looking to the week ahead, the advancing case revolves around folks regaining faith in the support of the short-term trend line, as the 10 day moving average has been showing weakness based on the second half of the week.
In terms of a consolidation case, look for SPY to oscillate back & forth, and around the 10 & 50 day moving averages as they draw closer together & we await an upside or downside catalyst.
To the downside, the most important level to be watching this week is the 50 day moving average’s support, as it closed on Friday in a historically Seller oriented price zone.
Should this break down, the $671.96 support levels resides in a Buyer zone, but far enough deep within it that sentiment may become overwhelming to the downside, leading to the next two support levels which also reside in Seller zones.
Should all of these retests occur & see breakdowns, $648.93/share will be where to focus on SPY possibly finding support.
SPY has support at the $691.59 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $687.67 (Volume Sentiment: Buyers, 3.4:0*), $682.94 (Volume Sentiment: Buyers, 6.23:1) & $679.88/share (50 Day Moving Average, Volume Sentiment: Sellers, 1.28:1) price levels, with resistance at the $696.09/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF declined -0.86% for the week, as the tech-heavy index was the least favored of the four major index ETFs.
Their RSI is trending downwards just above the neutral 50-mark, currently at 51.86, while their MACD crossed over bearishly a few sessions ago & still is in bearish territory.
Volumes were +9.32% higher than the prior year’s average levels (53,892,000 vs. 49,297,023), signaling that there was a bit of profit taking & fear creeping into the market.
Monday started the week off in a similar manners to SPY, where QQQ advanced +0.08% on the weakest volume of the week, indicating that there was not strong sentiment among market participants.
Tuesday opened slightly higher, but was unable to break above the $630/share level, ending the day as a high wave doji, but with the inability to break above that psychological hurdle mentioned above, it signaled for downside appetite on the horizon.
Wednesday opened on a gap down in-line with the 10 day moving average’s support, declined on the highest volume of the week to even temporarily break down the 50 day oving average’s support, but managed to close just below the 10 DMA’s resistance, indicating a sharp change in sentiment.
Thursday confirmed that there was blood in the water, as a gap up open was able to run up to the $630/share level, before slinking back down to close the day lower than it opened on the third highest volume of the week.
While it was able to advance slightly, it wasn’t enough from an advancing volume perspective to continue higher.
Friday opened slightly higher, but bears stepped in quickly & sold to force QQQ to break down & close below the 10 day moving average’s resistance for the second time in three days, signaling that there may be broader trouble ahead.
While the second highest volume of the week coming on Friday’s declines can be viewed as risk off heading into the weekend, it is likely symbolic of something larger at play.
Heading into the new week, the upside case revovles around breaking above the $630 newly established resistance level & folks finding strength in the short-term trendline of the 10 DMA.
After that, they just need the support of participants to run beyond the all-time high of $636.19/share.
The consolidation case sees QQQ oscillating around the 10 & 50 day moving averages while awaiting an upside or downside catalyst, which may be next week when the FOMC interest rate decision is announced on Wednesday.
To the downside, QQQ’s next two support levels are in historically Buyer zones, but their next two levels fall in Seller zones historically.
Any moves towards/through these levels bring all eyes to $589.37/share, as if support doesn’t hold up there the next two price zones are Seller oriented historically, which will likely result in a slide down to test the $579.99/share level.
QQQ has support at the $615.75 (50 Day Moving Average, Volume Sentiment: Buyers, 1.22:1), $612.39 (Volume Sentiment: Buyers, 1.04:1), $599.51 (Volume Sentiment: Sellers, 1.45:1) & $597.90/share (Volume Sentiment: Sellers, 1.45:1) price levels, with resistance at the $622.85 (10 Day Moving Average, Volume Sentiment: Buyers, 1.23:1), $624.06 (Volume Sentiment: Buyers, 1.23:1), $628.40 (Volume Sentiment: Buyers, 2.75:1) & $630.00/share (Volume Sentiment: Buyers, 4:0*) price levels.
IWM, the iShares Russell 2000 ETF advanced +2.13% for the week, being the only major index ETF that was able to turn out a week in the green.
Their RSI has flattened out in overbought territory, currently at 72.13, while their MACD is very extended bullishly, looking to settle down in the coming week.
Volumes were -6.35% lower than the prior year’s average (33,354,000 vs. 35,616,825), indicating that there was not much strength behind the move higher & that it should be viewed with skepticism.
Monday opened the week up on a note of optimism for IWM, as a bullish engulfing pattern emerged, but there was a sense of skepticism in the move as it came on the lowest volume of the week.
Tuesday the enthusiasm continued temporarily with a gap up open, but soon deflated to close just below Monday’s close on slightly more robust volume.
Wednesday opened lower, tested down to the $260.19/share level, but was able to power higher & close to form a bullish engulfing pattern with Tuesday’s candle on the week’s highest volume, indicating that there was still some bullish sentiment to go around.
Thursday confirmd this with a gap up open than ran up as high as $267.05/share, setting at a new all-time high & closing +0.88% on the day.
Friday opened on a gap up, but sent the weekend sentiment into the unknown, closing the day as a doji candle +0.09%.
The upside case heading into the new week is simple, closing out just below an all-time high set by Friday’s high price on the day means a continued rally can see higher prices set, but volume trends should be abided by (waning volume = less confidence in moves higher).
The consolidation case looks like a filling of the windows created by the late-week gap ups while awaiting the 10 day moving average to approach price & then IWM will begin oscillating around it while awaiting an upside or downside catalyst.
To the downside, the $257.34/share level is where to keep focused in the event of a breakdown of the 10 day moving average while the 50 DMA inches higher.
At price extremes like this there is either insufficient data (for the high price levels) or Buyer-skewed data, but the $257.34/share level is the gatekeeper to keep in focus.
IWM has support at the $260.01 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $257.34 (Volume Sentiment: NULL, 0:0*), $251.92 (Volume Sentiment: Buyers, 4.67:1) & $248.37/share (50 Day Moving Average, Volume Sentiment: Buyers, 4.67:1) price levels, with resistance at the $267.21/share (Volume Sentiment: NULL, 0:0*) price levels.
DIA, the SPDR S&P 500 ETF fell -0.32% on the week, having the second strongest week of the four majors.
Their RSI is trending down towards the neutral 50-mark, currently at 60.53, while their MACD is still bullish, but looks primed to cross over bearishly in the coming day or two.
Volumes were +48.64% higher than the prior year’s average (6,566,000 vs. 4,417,500), which paints an interesting picture as much of it came from Thursday’s high volume advancing session which lead the week, but three of the five sessions were declining, indicating that there is somewhat strong bearish sentiment in the market.
Monday the week kicked off forming a bullish engulfing pattern while also setting a new all-time high, but while elevated vs. the prior year’s average, volume was about average.
Tuesday opened lower, pushed all the way down to test the support of the 10 day moving average, but support held firm & the beginning of a flag pattern began to emerge.
Wednesday opened on a gap down in-line with the 10 day moving average’s support, before sinking below it & ultimately rallying higher to close above the open, but still -0.07% for the day on the week’s second highest volume.
Thursday managed to open on a gap higher, temporarily break the $495/share level, but ultimately settled to just below it on the week’s highest volume.
Friday opened higher, and while the support of the 10 day moving average held up, ended the week as a spinning top candle, indicating indecision on the horizon for the primarily “buy & hold” index.
Heading into the new week, the upside case stems around the flag bearing a bullish breakout to set a new all-time high.
The consolidation case sees oscillations around the 10 day moving average while awaiting an upside or downside catalyst, with the $485/share mark being the lower end of the range.
The 50 day moving average is still climbing, but won’t enter the picture unless there is some form of decline (or a prolonged consolidation).
To the downside, eyes should be on the 50 DMA’s support as it creeps higher.
Should it break down, the $468.44/share level is the gatekeeper to Seller-zones & limited support levels.
DIA has support at the $492.76 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $482.56 (Volume Sentiment: Buyers, 0.8:0*), $479.05 (50 Day Moving Average, Volume Sentiment: Buyers, 0.8:0*) & $478.57/share (Volume Sentiment: Buyers, 0.8:0*) price levels, with resistance at the $496.16/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday is Martin Luther King Jr. Day & the markets will be closed in observance of the holiday; there will be no major earnings announcements or economic data released.
There are no economic data announcements scheduled for Tuesday.
Tuesday morning begins with earnings from 3M, D.R. Horton, Fastenal, Fifth Third, Forestar, KeyCorp & U.S. Bancorp before the opening bell, followed by Netflix, Bank OZK, Hancock Whitney, Interactive Brokers, Progress Software, Simmons First National, United Airlines, Wintrust Financial & Zions Bancorp.
Wednesday features Construction Spending (Delayed Report) & Pending Home Sales data at 10 am.
Ally Financial, BankUnited, Charles Schwab, Citizens Financial Group, Haliburton, Johnson & Johnson, Old National Bancorp, Prologis, TE Connectivity, Teck Resources, Teledyne Tech, Travelers & Truist all report earnings before Tuesday’s open, before Banc of California, CACI International, FB Financial, Fulton Financial, Kinder Morgan, Knight-Swift, Pinnacle Financial & RLI Corp after the session’s close.
Initial Jobless Claims & GDP (first revision) data are scheduled for release at 8:30 am on Thursday.
Thursday morning kicks off with earnings from GE Aerospace, Abbott Labs, Atlantic Union Bankshares, Cadence Bank, FirstService, Freeport-McMoRan, Huntington Banc, McCormick, Millrose Properties, Mobileye Global, Northern Trust, OFG Bancorp, Old Republic, Procter & Gamble, Rogers Comms & Texas Capital, before Intel, Alaska Air, Alcoa, Assoc Banc-Corp, Capital One, Cathay Bancorp, Cohen & Steers, Columbia Banking, CSX, Customers Bancorp, East West Banc, Glacier Bancorp, Intuitive Surgical, Pathward Financial, Sallie Mae & SouthState Bank Corp. report after the session’s close.
Friday the week winds down with Personal Income (Delayed Report), Personal Spending (Delayed Report), PCE Index (Delayed Report), PCE (Year-over-Year), Core PCE Index & Core PCE Index (Year-over-Year) data at 8:30 am, before S&P Flash U.S. Services PMI & S&P Flash U.S. Manufacturing PMI data at 9:45 am & Consumer Sentiment (Final) data at 10 am.
Booz Allen Hamilton, Comerica, SLB & Webster Financial all report earnings before Friday morning’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 ***