SPY, the SPDR S&P 500 ETF gained +4.73% last week, while the VIX closed at 16.35, indicating an implied one day move range of +/-1.03%, and an implied one month move range of +/-4.73%.
Their RSI is trending towards overbought, currently at 59.1, while their MACD crossed the signal line bullishly on Friday, which will be something to keep an eye on heading into the new week.
Volumes were +16.06% higher than the prior year’s average (81,284,000 vs. 70,037,490), which shows some short-term resilience as each day of last week was an advancing session, however the waning enthusiasm levels at the end of the week paired with the gaps are cause for discomfort.
Monday began SPY’s week with a sign of strength at a test just above the $650/share level & charged higher to form a bullish harami pattern with Friday’s candle.
A note of caution was aired though based on the length of the upper & lower shadows on the day & the elevated volume likely reflected some intraday profit taking.
Tuesday opened on a gap higher & ran, getting up to near the 10 & 50 Day moving averages’ resistance and was able to temporarily break above them, but closed in-line with the levels.
Wednesday opened higher, but profits were taken near the 10 & 50 DMA recent intersection forcing SPY downward to break below the support of both moving averages temporarily, before market participants came roaring back to thrust SPY above both & to close above both levels.
It should be noted that Tuesday & Wednesday had the second & third highest volume levels, indicating that since MOnday enthusiasm levels began to wane.
Thursday is where things began to look dicey & unstable, as a gap up open was able to temporarily break above the $680/share level, but was forced lower to close at $679.68 & it became evident that there were bears entering the chat.
Thursday also featured some profits being taken following the run up of the week from the low of $650.85, but the inability to close above $680/share & the waning volume clearly showed that enthusiasm was leaving the building.
Friday featured another gap up, and issued a warning for the coming week, as the body of the day’s candle closed like a spinning top with no shadow on the top or bottom on the week’s lowest volume.
The shadow on the spinning top candles indicates that there is uncertainty & that there is a range of it, but with little-to-no shadow it appears more like complacency & a wait & see approach, which does not instill much confidence.
Looking ahead, the upside case requires SPY to take out the $684.96/share resistance level, which it didn’t even flirt with on Friday, which adds to the air of caution mentioned above.
Should that occur & we see strong advancing volume there is a chance at taking a run at the all-time high of $689.70/share.
The consolidation case focuses around filling the gaps of last week, before oscillating around the 10 & 50 Day moving averages awaiting an upside or downside catalyst.
This week is relatively quiet on earnings & announcements, but employment data is coming out, as is missed PCE data which could potentially be market moving given how the Fed is watching both for policy clues & the most recent cut was attributed to the labor market.
To the downside, there are plenty of unfilled windows from last week that could see SPY be walked down to the week’s low of $650.85/share.
In the event that we see that SPY will have passed through two Seller dominated zones historically, then has $645-649.99 & $640-644.99/share for Buyer zones before reentering Seller territory for two more zones with only one support touchpoint within them.
Should this happen the 200 day moving average continues to creep higher & suddenly is within a reasonable distance, putting the long-term trend possibly in question.
SPY has support at the $673.95 (Volume Sentiment: Buyers, 2.5:1), $670.44 (50 Day Moving Average, Volume Sentiment: Buyers, 2.5:1), $667.87 (10 Day Moving Average, Volume Sentiment: Buyers, 2.55:1) & $661.21/share (Volume Sentiment: Buyers, 1.58:1) price levels, with resistance at the $684.96 (Volume Sentiment: NULL, 0:0*) & $689.70/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF added +5.73% last week, as investors were less weary of the tech-heavy index.
Their RSI is trending higher at 56.28, while their MACD crossed over the signal line bullishly on Friday, just like SPY’s.
Volumes were +22.18% higher than the prior year’s average (57,290,000 vs. 46,891,753), echoing the same sentiments as SPY in the section above.
Monday QQQ began similarly to SPY, opening in Friday’s range, breaking lower to test the $580/share level which held up, before testing higher & closing the day as a spinning top candle that formed a bullish harami with Friday’s session.
Like SPY, QQQ saw some profits taking intraday on Monday based on the high volume but limited actual growth for the day.
Tuesday opened on a gap higher & continued to climb to close in-line with the resistance of the 10 & 50 day moving averages which recently had crossed over bearishly.
Wednesday saw a retest through most of Tuesday’s candle’s real body, before QQQ advanced to temporarily break above the resistance of the 50 day moving average & close in-line with it.
Thursday is where the weakness began to show though, as a gap up open resulted in a spinning top on the second lowest volume of the week, indicating that there was not much confidence left in the market.
Friday confirmed this when another gap up open resulted in a box shaped candle with little-to-no upper/lower shadow on extremely weak volume, which does not indicate that there is much confidence in the tech heavy index heading into the weekend.
Similar to SPY, QQQ’s upside case revolves around breaking out above its next resistance levels ($624.86/share) & running higher in an attempt to break above their all-time high ~2% above it.
This will require sturdy increases in advancing volume to be sustainable & should be viewed with a cautious eye.
The consolidation case is also similar, as there are a handful of gaps from last week that need to be filled, leading QQQ down to oscillate around & in between the 10 & 50 day moving averages as we await an upside or downside catalyst.
The declining case for this week is focused on the open windows of last week being filled, as well as a breakdown of the support of the 10 & 50 DMAs.
Should that occur, the next support levels of $598.67 resides in a Seller dominated zone for the past year, then a Buyer zone & another Seller zone in the $585-589.99/share zone, making the downside point to watch this week $580.74, as that will become a key area to watch in the event of the aforementioned breakdowns.
QQQ has support at the $613.18 (Volume Sentiment: Buyers, 1.17:1), $608.72 (50 Day Moving Average, Volume Sentiment: Buyers, 2.2:0*), $603.20 (10 Day Moving Average, Volume Sentiment: Buyers, 2.74:1) & $598.67/share (Volume Sentiment: Sellers, 1.17:1) price levels, with resistance at the $624.86 (Volume Sentiment: NULL, 0:0*) & $637.01/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF advanced +8.57% last week, as investors piled into small cap names.
Their RSI is curling over at the 60-mark, while their MACD has been bullish since Thursday, as the small cap index had a very strong week.
Volumes were +36.10% higher than the prior year’s average (47,060,000 vs. 34,578,207), which will be cause to watch this week to see if it was actually a sustainable rotation into small caps, or if we see a violent rug pull & profits taken in the coming week.
The latter seems likely given that IWM moved in a manner that is much more similar than SPY & QQQ compared to the index’s normal behavior.
Monday opened just above the $230/share level, briefly tested lower, before storming higher, testing the resistance of the 10 DMA & closing just below it to form a bullish harami pattern with Friday’s candle.
Tuesday opened on a gap higher in-line with the 10 DMA, tested down towards the $235/share level, before catapulting higher to temporarily break above the $240/share level intraday.
The rally continued Wednesday, where the second highest volume of the week came on a gap up open that tested lower to the $240/share level, bounced off of it & ran higher to break out above the resistance of the 50 DMA.
Thursday opened on another gap higher above $245/share, tested slightly lower & ran off higher, but much like with SPY & QQQ the bears began to creep back into the market and the session’s upper shadow sobered up market participants who were thinking a big rally was getting underway.
Friday opened on another gap higher, but the low volume session produced a day-over-day gain of +0.59%, but the day’s candle resembled a miniature hanging man, indicating that there is hesitency/gloom on the horizon for IWM.
To the upside, Thursday’s high needs to be broken through firstly, but if enough volume prevails there is a shot at running for the all-time high; it will likely be more dependant on the moves of the other major 3 index ETFs in this article.
For our consolidation case, as gaps fill in & price heads back towards the 10 & 50 DMAs there will be oscillations in-between & around them while we await an upside or downside catalyst.
The downside will likely hinge a bit on the other major three indexes, but it begins with a breakdown of the support of the 10 & 50 day moving averages.
Should that happen, the $232-235.99/share level is a Seller zone historically, so all eyes then should be directed to $236.27/share & $228.90/share, the latter of which has two touch-points on the past year’s chart.
IWM has support at the $248.48 (Volume Sentiment: NULL, 0:0*), $246.38 (Volume Sentiment: NULL, 0:0*), $243.15 (50 Day Moving Average, Volume Sentiment: Buyers, 2.19:1) & $240.86/share (Volume Sentiment: Buyers, 2.19:1) price levels, with resistance at the $248.82 (Volume Sentiment: NULL, 0:0*) & $252.77/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF gained +4.17% for the week, as the blue chip index performed the worst of the four majors.
Their RSI is trending towards the overbought 70-mark, currently sitting at 59.66, while their MACD bullishly crossed the signal line on Friday.
Volumes were +60.69% higher than the prior year’s average levels (6,608,000 vs. 4,112,270), reflecting a similar setup pattern as the three majors above & raising questions as to whether or not we’ll see a rug pull & flurry of profit taking in the near-term.
Monday opened to form a similar bullish harami pattern for DIA on volumes that eclipsed the rest of the week (and most of the rest of the year sans 3 sessions).
Tuesday opened on a gap higher, closed as a spinning top, but with high wave upper & lower shadows, indicating that there was a bit of uncertainty surrounding the session, with the exception of market participants would not let DIA venture above the resistance at the 50 DMA.
Wednesday opened on another gap higher, retraced back into the real body of Tuesday’s candle, before powering higher & breaking out above the 10 & 50 DMA’s resistance levels & closing well above them.
Thursday saw another gap up open, but bears began to come back out once the $475/share level was crossed into short-term profit taking kicked in & prices were forced to close at $474.35, a gain of +0.67% day-over-day.
Friday saw yet another gap up open, and like the aforementioned index ETFs there was little upper shadow on the day’s candle, indicating that investors have become cautious heading into the close of the week.
To the upside, DIA needs to break above the $479.79/share resistance level & see some strong advancing volume if it wants to make a meaningful run at the all-time high ~1% above it.
It’s not impossible, but given the gappy nature of last week’s advances it seems unlikely.
The consolidation case involves closing the windows mentioned above & on the way down finding some support to oscillate around & in -between the 10 & 50 DMAs.
The downside case sees DIA breaking down through the support of the 10 & 50 DMAs, where the $457.13/share support levels comes into clear play, as it is the gatekeeper to the $452-455.99/share zone that is Seller dominated historically.
Should that break down, the $453.84/share zone is likely to break down as well, moving attention in the medium-term to $447.99/share.
DIA has support at the $469.63 (Volume Sentiment: NULL, 0:0*), $466.97 (10 Day Moving Average, Volume Sentiment: Buyers, 1.9:1), $466.61 (10 Day Moving Average, Volume Sentiment: Buyers, 1.9:1) & $464.28/share (Volume Sentiment: Buyers, 1.9:1) price levels, with resistance at the $479.79 (Volume Sentiment: NULL, 0:0*) & $483.79/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday kicks the week off with S&P Final U.S. Manufacturing PMI data at 9:45 am, before ISM Manufacturing data comes out at 10 am.
Credo Technology Group, MongoDB & Vestis all report earnings following Monday’s session.
Auto Sales data is scheduled for release on Tuesday.
Tuesday morning’s earnings calls include Bnak of Nova Scotia & Signet Jewelers, before American Eagle, Asana, Box, CrowdStrike, GitLab, Marvell Technology, Okta & Pure Storage report after the session’s closing bell.
Wednesday brings us ADP Employment data at 8:15 am, followed by Import Price Index (Delayed Report) & Import Price Minus Fuel data at 8:30 am, S&P Final U.S. Services PMI data at 9:45 am & ISM Services data at 10 am.
Dollar Tree, Macy’s, Royal Bank of Canada & Sprinklr all report earnings before the session’s open, before Salesforce, C3.ai, Descartes, Five Below, Guidewire Software, HealthEquity, nCino, PVH, Snowflake & UiPath report after the closing bell.
Initial Jobless Claims & U.S. Trade Deficit data come out Thursday at 8:30 am.
Thursday morning features earnings from Dollar General, Bank of Montreal, Brown-Forman, BRP, CIBC, Donaldson, Hormel Foods, Kroger, Science Applications, Toronto-Dominion Bank & Wiley, followed by Argan, Cooper, DocuSign, Domo, Hewlett Packard Enterprise, Rubrik, Samsara, SentinelOne, ServiceTitan, Smith & Wesson, Stitch Fix, Ulta Beauty & Zumies after the closing bell.
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 (Delayed Report) & Core PCE (Year-over-Year) at 8:30 am, followed by Consumer Sentiment (prelim) at 10 am & Consumer Credit at 3pm.
Victoria’s Secret reports 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 ***