SPY, the SPDR S&P 500 ETF added +0.34% last week, while the VIX closed the week at 15.41, indicating an implied one day move range of +/- 0.97% & an implied one month move range of +/-4.45%.
This note was delayed due to holiday obligations over this past weekend, but will resume normal schedule (also, note that price labels are not included in these charts like normal, in a rush effort to get them all in-time to be relevant to Friday’s close).
Their RSI is relatively flat at 60.16, while their MACD is bullish, but also beginning to flatten after the week of relative consolidation.
Volumes were -8.91% lower than the prior year’s average (64,520,000 vs. 70,831,080), signaling a cooling off from weeks prior of heightened volume.
Monday opened the week up on a gap down, but was able to trudge higher throughout the session & despite closing below its daily high, SPY did manage to close higher than it opened.
Volume was higher than the previous Friday’s advancing session though, indicating that there was a little bit of profit taking from short-term gains.
Tuesday opened on a gap higher at $681.92 & floated just above the $680/share level, ultimately closing the day as a doji, indicating that there was a hint of uncertainty in the air & that market participants found that area to be a safe valuation for SPY.
Tuesday’s volumes were slightly higher than Monday’s, but still not indicative of any true change in sentiment, as outlined by the resulting candlestick.
Things got a little more optimistic on Wednesday, when SPY opened lower, tested in the sub-$680 range momentarily, before powering higher to close +0.35%, which managed to form a bullish engulfing pattern with the prior day’s doji.
However, what made the move more interesting is that it was the most bullish session of the week, yet occurred on the lightest volume, indicating that there was limited faith behind the move higher & there was still an air of extreme caution.
Thursday confirmed this when a gap higher open saw SPY retrace over halfway through Wednesday’s real-body range as short-term profit taking struck again, but the day managed to rally back to squeeze higher to close just below its opening price into a resulting dragonfly doji, but the volume behind all of the movement lacked conviction.
Friday the week closed down with a relatively flat open that made a run at the $690/share level, but again, short-term profit taking struck & the session wound up advancing only +0.19% & forming a gravestone doji on the highest volume of the week.
That paints a bleak outlook picture given that there was a bit of profit taking happening heading into the weekend, despite the day’s overall advance.
Heading into the new week, the upside story remains the same as last week’s note & many prior; in order to see a meaningful continued climb higher we will need to see more volume behind advancing sessions, with less profit taking being indicated by the upper shadows of candles such as Friday’s.
The consolidation case also remains similar, as SPY will likely oscillate around the 10 DMA, with any downside movement making it oscillated between the 10 & 50 DMA’s awaiting an upside/downside catalyst, such as Wednesday’s FOMC decision, or earnings reports such as Oracle’s, which is also Wednesday (see The Week Ahead below).
To the downside, the table below can be useful to assess volume sentiment at their support levels using data from the past ~3 years, but if the 10 DMA’s support breaks down, all eyes should go to the 50 DMA for support.
In the event that that breaks down, the $661.21/share level is the gatekeeper to back-to-back Seller oriented price zones, which could spell bigger trouble for SPY as the $653.17 & $650.85/share support levels reside in them, and further declines could follow their breakdown.
It is also worth considering that there may be a double top emerging, where the all-time high was unable to be broken through, triggering further declines.
SPY has support at the $684.96 (Volume Sentiment: NULL, 0:0*), $680.49 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $673.95 (Volume Sentiment: Buyers, 2.5:1) & $672.91/share (50 Day Moving Average, Volume Sentiment: Buyers, 2.5:1) price levels, with resistance at the $688.39 (Volume Sentiment: NULL, 0:0*) & $689.70/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF advanced +1.01%, as the tech heavy index fared the strongest of the four majors.
Their RSI is at 59.39 & flattening, but still climbing, while their MACD is bullish, but also signaling a potential flattening is on the horizon.
Volumes were +2.65% higher than the prior year’s average levels (48,804,000 vs. 47,542,360), which is presenting that market participants are treating the tech-heavy index with a wait & see attitude in the near-term.
Monday the week began similar to SPY’s, with a gap down open to $617.17 that managed to trudge higher throughout the session, but on the week’s lowest volumes, indicating that there was not strong sentiment coming from the bulls.
Tuesday opened on a gap higher, tested lower, but ultimately managed to power above the $620/share level & close higher, but the spinning top candle spelled a message of caution for market participants as uncertainty was in the air & the high level of volume for the week expresses short-term profits were taken.
Wednesday opened lower, but managed to turn higher after a brief retrace towards Tuesday’s low, and the close was +0.24% day-over-day, a true slow & steady approach to advancing higher.
Thursday opened on a gap higher, but bears rushed in to force the day lower, taking profits & forcing a declining day that temporarily broke below the $620/share level, but bulls managed to force prices higher to close down only -0.09% on the day.
However, the candle formed a hanging man in the wake of the advancing sessions higher, indicating bearishness began creeping steadily into the market & folks were becoming cautious.
Friday the week wound down with another ominous note, as a shooting star candle emerged on what was another highervolume session for the week, and despite it resulting in a day-over-day gain, the upper shadow indicates that market participants wanted to take their ball & begin heading home.
The upside case heading into a new week will require more sustainable elevated advancing volume levels, as well as less days like Friday where a strong upper shadow indicates that there was a loss of upside appetite, as QQQ is still near its all-time high.
The consolidation case is also similar to last week’s, where QQQ may straddle the 10 DMA & in the event of a slight downside move begin to oscillate between it & the 50 DMA, while awaiting an upside or downside catalyst.
The downside case is also similar week-over-week, as QQQ did not climb incredibly higher.
If the 10 DMA breaks down, look to the 50 DMA for support & should that break down there may be trouble brewing, as the $598.67 next support level resides in a price zone that is histoically Seller-centric over the past year & while the next support level ($590.13/share) resides in a Buyer zone, in the event of a breakdown the following Seller zone leads to the $580.74/share support level.
That will need to hold up to avoid seeing further declines for QQQ.
QQQ has support at the $624.86 (Volume Sentiment: NULL, 0:0*), $618.10 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $613.18 (Volume Sentiment: Buyers, 1.17:1) & $611.70/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.17:1) price levels, with resistance at the $628.92 (Volume Sentiment: NULL, 0:0*) & $637.01/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF climbed +0.81% last week, having the second strongest week of ht major index ETFs.
Their RSI is heading down after advancing all week following Friday’s profit taking session that could not break above its all-time high set the day before, and their MACD is bullish & extending higher but signaling signs of exhaustion.
Volumes were +2.4% higher than the prior year’s average (35,780,000 vs. 34,940,200), which is not indicative of any particularly strong sentiment, given that the volumes of the previous year have been better than the prior year, but still lackluster compared to year’s prior.
Monday began IWM’s week on decent volume, but a gap down & gravestone doji, which normally indicates impending weakness.
However Tuesday opened on a gap up, but doubled down on the weak sentiment as it formed a bearish engulfing pattern with Monday’s candle, with the only point of doubt behind that indication was that it was on the week’s weakest volume.
Sure enough, Wednesday managed to open higher & take a run up towards the $250/share level, but was stopped just short; the volume behind the move, much like Tuesday’s was unconvincing in terms of long-term strength behind it.
Thursday opened slightly lower, but managed to continue the squeeze higher & rally its way up to a new all-time high (which disproved what we’d published last week re: IWM’s upside case, temporarily, but again, note the “squeeze”).
Friday confirmed the right to believe that this was not a strong move, as a lower open led to a brief rally that was unable to break above the new all-time high set on Thursday, which then led to a severe bout of profit taking on the week’s second highest volume.
Between the goal-line stand at $252.66/share back-to-back & the day’s bearish harami forming candle do not inspire much in terms of confidence in the near-term & hint at caution being taken by market participants.
With that said, the upside case continues on the same like all the other three majors, to see continued rallying higher there will need to be an uptick in volume, indicating that market participants are confident in the small cap index (and broader markets as a whole).
The consolidation case now is set to a new range within the range of Wednesday & Thursday’s candles, awaiting the arrival of the 10 DMA, as well as an upside or downside catalyst.
The downside case for IWM now becomes tricky as they’ve managed new all-time highs & are well above any historic Seller zones from the past 2-3 years.
They also have a nice potential support zone from the consolidation ranges of the past few months, as well as the 10 & 50 DMA’s there for support.
The $237.56/5 support levels & the $236.27/share support levels are areas to focus on though, as any breakdown that leads to those levels now leaves IWM on a balance beam above a historic Seller zone that contains no support levels, and may lead to larger declines from there.
Similar to SPY, a double top and or bearish head & shoulders pattern could be emerging over the coming month, which should be accounted for when assessing IWM’s strength/weakness.
IWM has support at the $248.48 (Volume Sentiment: NULL, 0:0*), $247.50 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $246.38 (Volume Sentiment: NULL, 0:0*) & $243.96/share (50 Day Moving Average, Volume Sentiment: Buyers, 2.19:1) price levels, with resistance at the $252.66/share (All-Time High, 2x Touch-Point, Volume Sentiment: NULL, 0:0*) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF gained +0.6% for the week, as the blue chip index was out of favor, beating only the S&P 500 for the week.
Their RSI has flattened, sitting at 60.93, while their MACD is still bullish, but signaling signs of exhaustion.
Volumes were +16.47% higher than the prior year’s average (4,846,000 vs. 4,160,560), which does not necessarily paint a rosy picture given the daily distribution & the week’s performance.
Monday kicked off on a gap down, which attempted to run higher, but was stalled out when bears came rushing in to take profits & the day resulted in an inverted hammer candle, with volumes on the lower side of the week.
Tuesday opened higher, but spent the day straddling the $475/share level, forming a spinning top candle around it, indicating that there was uncertainty in the air.
Wednesday opened lower, but a surge of volume (highest of the week) was able to push DIA higher towards the $480/share level, but it closed the day justshot of it after temporarily breaking above it.
Thursday opened higher, tested higher, but was swiftly rejected & closed the day forming a doji star & signaled that folks were truly on the fence about the blue chip index, as also indicated by the low volume.
Friday confirmed teh bearish sentiment, opening lower, but testing higher & closing up +0.2% on the day, but the upper shadows of Thursday & Friday said DIA was running on fumes.
Heading into the week, the upside case remains the same, an increase in advancing volume is required to keep rallying to chase the all-time high.
Consolidation comes in the form of finding a range between Friday’s close & Wednesday’s low, while we await the 10 DMA to arrive & DIA will either oscillate around it & or an upside/downside catalyst will take it in a direction.
To the downside, should the 10 DMA be broken down through, the 50 DMA will likely be the next target of DIA.
Should that break down, there is downward momentum that may break down the $464.28/share level, leaving the $457.13/share level as the gatekeeper to the $452-455.99/share zone, which is Seller oriented & contains their next support levels, which could bring focus to the $447.99/share level, as well as the long-term trendline, the 200 Day moving average which lurks just below it.
DIA has support at the $479.79 (Volume Sentiment: NULL, 0:0*), $475.17 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $469.63 (Volume Sentiment: NULL, 0:0*) & $468.90/share (50 Day Moving Average, Volume Sentiment: NULL, 0:0*) price levels, with resistance at the $481.93 (Volume Sentiment: NULL, 0:0*) & $483.79/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
There are no major economic data releases set for Monday.
Monday evening brings earnings reports from Compass Minerals, Phreesia & Toll Brothers after the session’s close.
Tuesday morning brings us NFIB Optimism Index data at 6 am, before Job Openings (delayed report) at 10 am.
Academy of Sports + Outdoors, AutoZone, Caleres, Campbell Soup, Core & Main, Ferguson, G-III Apparel, Korn/Ferry, Ollie’s Bargain Outlet & SailPoint all report earnings before Tuesday’s opening bell, followed by AeroVironment, Braze, Casey’s General, Cracker Barrel, Dave & Buster’s & GameStop after the closing bell.
Employment Cost Index (Delayed Report) data comes out at 8:30 am, before the highly anticipated FOMC Interest Rate Decision and Monthly U.S. Federal Budget at 2pm & Fed Chair Powell’s Press Conference at 2:30 pm.
Wednesday morning’s earnings reports include Chewy, Hello Group, Photronics & Uranium Energy, with Oracle, Adobe, NANO Nuclear Energy, Nordson, Oxford Industries, Planet Labs, Synopsys & Vail Resorts all scheduled to report following the session’s close.
Thursday morning brings us Initial Jobless Claims data at 8:30 am.
Ciena & Lovesac report earnings Thursday morning, followed by Broadcom, Costco, Lululemon Athletica & Netskope after the close of trading.
Fed Presidents Paulson & Hammack are both scheduled to speak at 8:30 am on Friday & there are no noteworthy earnings reports scheduled for the day.
*** I DO NOT OWN SHARES OR OPTIONS CONTRACT POSITIONS IN SPY, QQQ, IWM OR DIA AT THE TIME OF PUBLISHING THIS ARTICLE ***