SPY, the SPDR S&P 500 ETF closed the week out down -0.28%, while the VIX closed at 16.4, indicating an implied one day move of +/-1.03% & an implied one month move of +/-4.74%.
Their RSI is straddling the overbought 70 level & currently sits at 68.45, while their MACD is flat, but its histogram is signaling that it is fading & likely to see a bearish crossover in the coming days.
Volumes were 2.89% higher than the previous year’s average (61,582,500 vs. 59,854,720), which is not a signal of confidence given that three of the five sessions of the week resulted in declines.
Monday the week opened on a weak note, as the week’s highest volume session resulted in a decline of -0.75% & the lower shadow of the day’s candle managed to break down below the $620/share level temporarily, indicating that there was some profits being taken still from the previous week’s rally.
Tuesday opened slightly higher, only to continue the declines as the session wore on, but it was more of a continuation of Monday’s action, given that the volume was noticeably lower.
Wedensday the gap ups of the previous couple of weeks returned, but the lower shadow of the day’s session indicated that there was still a strong tendency towards the 10 day moving average, which had inched closer following the previous two days.
While Wednesday was the week’s second highest volume session, the spinning top candle it resulted in show a severe amount of uncertainty heading into bank earnings week & readings on inflation data.
Thursday opened on a much smaller gap up & the party rallied on, as a new all-time high was reached, but the mediocre volume didn’t show that there was much enthusiasm in the air.
Friday the evening star pattern emerged, but with a twist as the session opened on a gap down, approached the 10 day moving average’s support but kicked higher to close above its open, but still for a loss on the day.
Yes, there’s a bit to unpack there; a gap down open is bearish, the 10 DMA maintaining support indicates not bearishness in the near-term (or at least appetite to remain above it as it continues higher), the close above the open is not viewed bearishly, but the evening star pattern is bearish.
Heading into the new week that is going to be marked primarily by big bank earnings, Fed Speakers & CPI/PPI data, any potential upside case will be targeting a new all-time high & require some serious advancing volume behind it to be sustainable.
The consolidation case may still show a near-term new all-time high, where SPY straddles its 10 day moving average as market participants digest the information that they’re about to receive & think about how prospective tariffs also will impact that data & future company/market performance.
In the event of a consolidation while awaiting an upside or downside catalyst, it will be important to keep an eye on the gaps that have taken place over the past few weeks, as they will look to be filled, which would force declines.
The support levels below SPY’s closing price from Friday are all in an interesting area, as due to the nature of being at all-time highs their Buyer:Seller historic data is skewed towards the Buyers as we are at a price extreme.
However, they are also relatively sparse, as the data below shows which signals that any declines could be more violent than anticipated, particularly due to the gaps mentioned above.
SPY has support at the $621.07 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $609.59 (Volume Sentiment: Buyers, 2.6:1), $603.42 (Volume Sentiment: Buyers, 7:1) & $593.51/share (50 Day Moving Average, Volume Sentiment: Buyers, 1.91:1) price levels, with resistance at the $626.87/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF dipped -0.36% for the week in a week where all of the major indexes felt some pain.
Their RSI is trending out of overbought territory & currently sits at 66.53, while their MACD is looking ready to cross over bearishly across the signal line in the coming day or two.
Volumes were -2.92% lower than the previous year’s average (38,382,500 vs. 39,536,320), which shows that there is still quite a bit of enthusiasm for names such as NVDA & ORCL, although it should be noted that the past year’s volume is still much lower than it had been for the years prior.
Monday QQQ opened on a gap down & temporarily broke down below the $550/share level after approaching the 10 day moving average’s support, but did not officially test it during the week’s highest volume session.
Tuesday’s candle added a hint of complexity to the week, when the session opened just below Monday’s open & closed just above it’s closing price, forming a harami pattern that is technically bearish given the day closed lower than it opened in terms of market participants sentiment.
Both of the first two candles of the week were spinning tops, indicating indecision among market participants.
That remained the theme of the week, when Wednesday produced a gap up open & a new all-time high for QQQ on the week’s second highest volume, and the candle resulted in a spinning top.
Thursday opened on a gap up, but was unable to test as high as Wednesday’s high & there was quite a bit of profit taking as shown by the day’s lower shadow.
Thursday was also the lowest volume of the week & resulted in a spinning top, indicating that the uncertainty still reigned supreme, but that there was now signs of appetite down by the 10 day moving average’s support.
Friday the week began to show that there was fear creeping into market, as a gap down open tested below the 10 day moving average briefly, before closing the session out as a loss & a doji candle heading into the weekend.
Much like SPY, QQQ is near its all-time high, so the upside case is going to require a breakout above their ATH & an increase in volume if it wants to remains sustainable.
A consolidation would look like a continuation of last week, but oscillating around the 10 day moving average which has now begun to show signs of frailty.
In the event of a decline, much like SPY there are sparse support levels around for QQQ, which means that there’s not much for QQQ to find footing on nearby & due to how high QQQ sits, there is a skewed view of Buyer:Seller traffic in the direction of the Buyers as we are near the top.
Still, the chart below can be referenced to use as a barometer while navigating & assessing the strength of any support levels that QQQ encounters in the coming weeks.
QQQ has support at the $552.40 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $539.40 (Volume Sentiment: Buyers, 3.67:1), $536.88 (Volume Sentiment: Buyers, 3.67:1) & $532.43/share (Volume Sentiment: Buyers, 3:1) price levels, with resistance at the $557.63/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF shed -0.62%, as the small cap index managed to outperform the larger blue chip Dow Jones.
Their RSI is trending back from the overbought levels & is currently 62.3, while their MACD is showing signs of curling over bearishly, likely to cross over by the end of the week.
Volumes were +7.91% higher than the prior year’s average (33,555,000 vs. 31,095,160), signaling that there is waning enthusiasm about the future of the small-cap index & investors are seeking a more risk-off approach currently.
Monday opened on a gap down, attempted a run higher & broke the $222.50/share mark briefly, before the bottom came out & everyone began piling out of the pool, resulting in a daily decline & the week’s highest volume.
Lot of profit taking from the previous week and a half’s rally above the long-term trend line.
Tuesday opened higher, briefly broke above Monday’s opening price, but sunk down to close for a daily advance & form a bullish harami pattern.
Wednesday opened as a gap up, retraced back down to Tuesday’s range for a bit before powering higher to close as an advancing session near the day’s high.
Thursday opened higher, tested back in Wednesday’s range, but continued climbing, reaching as high as $226.05, but closing at $224.80/share, indicating that market participants had begun to think that IWM had strayed too far from its 200 day moving average after its recent breakout above it.
Friday the week closed out following that narrative, as the session opened on a gap lower, was unable to break above far into Thursday’s real body & the session deflated throughout the day as there was risk-off into the weekend sentiment abound & profits taken following that three day rally.
The upside case for IWM heading into a new week will likely be determined by a gap up & how aggressively market participants come pouring in.
The $226/share level would then likely be encroached upon following the gap, where there are two touch-points at $226.04 & one at $226.05/share, in a zone that is historically dominated by Seller volume.
That’s a gate that will need to break down & will be tested unless gapped over, so keep an eye out for that.
There’s also an emergence of a bearish head & shoulders with the left shoulder occurring in early August 2024 at $226.04, the head forming in November of 2024 at $243.04 & Thursday’s $226.05/share forming the right shoulder.
While this is unconfirmed yet, it is something else to watch for in that upside argument.
In the event of a consolidation, IWM will likely oscillate around its 10 DMA awaiting an upside/downside catalyst.
The downside gets interesting, because the 10 day moving average will have to breakdown first, with price either going straight to test the 200 DMA’s support or consolidating briefly in between the long & short term trend lines.
SHould the 200 DMA be broken through, there is another shorter-term bearish head & shoulders forming for IWM that has left shoulders in both May & June, which will make the $215.43 (Sellers, 1.89:1) & $209.55/share (Buyers, 1.9:1) areas to keep an eye on moving forward.
The table below may be beneficial for assessing the strength/weakness of support & resistance levels moving forward.
IWM has support at the $220.45 (10 Day Moving Average, Volume Sentiment: Buyers, 2.41:1), $219.93 (Volume Sentiment: Buyers, 1.19:1), $219.57 (Volume Sentiment: Buyers, 1.19:1) & $216.76/share (Volume Sentiment: Buyers, 1.19:1) price levels, with resistance at the $222.40 (Volume Sentiment: Buyres, 2.41:1), $224.08 (Volume Sentiment: Sellers, 1.23:1), $224.60 (Volume Sentiment: Sellers, 1.23:1) & $225.37/share (Volume Sentiment: Sellers, 1.23:1) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF declined -1.01%, having the worst weekly performance of the major four index ETFs.
Their RSI is coming back from overbought territory & is currently at 63.3, while their MACD is currently bullish, but looks set to break down bearishly in the coming days.
Volumes were -3.57% lower than the prior year’s average (3,107,500 vs. 3,222,560), making this weekly decline appear as if to be short-term profit taking.
Monday opened lower, and set the stage for the week’s declines tumbling to as low as $441.56, to recover modestly and close down on the day at $444/share on the week’s highest volume session.
Tuesday opened on a gap down that made an attempt higher that was quickly thwarted & the declines continued, although not as low as Monday’s low, as the two highest volume sessions of the week saw profits being taken.
Wednesday was an interesting session, opening on a gap higher, testing lower but staying above the 10 day moving average, and briefly breaking above the $445/share level to close the day as a dragonfly doji.
Thursday opened higher, dipped below Wednesday’s real body range (not too tough to do on a doji), before rallying higher, but much like IWM they closed well below the day’s high leaving a decent sized upper shadow.
Friday exposed the blue chip index’s weakness though, when the day opened on a gap down just below the 10 day moving average, tested lower, tested higher, only to close as a doji candle just below the 10 DMA’s resistance & below its opening price.
Its beginning to seem like folks are interested in taking more profits from the blue chip index & perhaps are even getting uneasy, especially heading into a big week like this one.
Same as SPY & QQQ, DIA’s upside case requires a breakout above their all-time high, which will need to see a lot of upside volume increases that remain consistent before the breakout looks sustainable.
It is worth noting too that they’re currently in a Seller dominated price zone, which will make that feat even more difficult.
The consolidation case involves oscillating around the 10 DMA & hoping that no downward momentum is gained by the filling in of any of the gaps <$440/share.
To the downside, should the $439.84/share level break down & the gaps of the past week & a half begin to fill there aren’t many nearby support levels for DIA to find stable footing on, which may cause accelerated declines.
This would also be compounded upon possibly due to the $428-431.99/share price zone being Seller dominated historically.
DIA has support at the $439.84 (Volume Sentiment: Buyers, 1.71:1), $430.27 (Volume Sentiment: Sellers, 1.43:1), $428.31 (Volume Sentiment: Sellers, 1.43:1) & $427.44/share (Volume Sentiment: Buyers, 4.5:1) price levels, with resistance at the $443.73 (10 Day Moving Average, Volume Sentiment: Sellers, 1.24:1), $446.72 (Volume Sentiment: Buyers, 14:1), $447.00 (Volume Sentiment: Buyers, 14:1) & $448.86/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday the week starts off on a quiet note with no major economic data scheduled for release.
Fastenal reports earnings before Monday’s opening bell, followed by FB Financial & Simulations Plus after the session’s close.
Consumer Price Index, CPI Year-over-Year, Core CPI, Core CPI Year-over-Year & the Empire State Manufacturing Survey data are all released at 8:30 am on Tuesday, followed by Fed Governor Bowman speaking at 9:15 am, Fed Governor Barr speaking at 12:45 pm, Fed President Collins Speaking at 2:45 pm & Fed President Logan speaking at 6:45 pm.
JP Morgan Chase, Citigroup, Wells Fargo, Albertson’s, AngioDynamics, BlackRock, BNY Melon, Ericcson & State Street report earnings before Tuesday’s open, before Fulton Financial, Hancock Whitney, J.B. Hunt Transportation & Pinnacle Financial report after the session’s closing bell.
Wednesday brings us Producer Price Index, Core PPI, PPI Year-over-Year & Core PPI Year-over-Year data at 8:30 am, followed by Industrial Production & Capacity Utilization data at 9:15 am, Fed Governor Barr speaking at 10 am & The Fed Beige Book at 2 pm.
ASML, Bank of America, Commerce Bancshares, First Horizon, Goldman Sachs, Johnson & Johnson, M&T Bank, Morgan Stanley, PNC, Progressive & Prologis report earnings on Wednesday morning, with AAR, Alcoa, First Industrial Realty, Home Bancshares, Rexford Industrial Realty, SL Green Realty, Synovus, Triumph Financial & United Airlines all set to report after the closing bell.
Initial Jobless Claims, U.S. Retail Sales, Retail Sales minus Autos, Import Price Index, Import Price Index minus Fuel & the Philadelphia Fed Manufacturing Survey data at are released Thursday at 8:30 am, before Business Inventories, Home Builder Confidence Index data & Fed Governor Kugler speak at 10 am, Fed Governor Cook speaks at 1:30 pm & Fed Governor Waller speaks at 6:30 pm.
Abbot Labs, Cintas, Citizens Financial Group, Elevance Health, Fifth Third, Forestar, GE Aerospace, Insteel Industries, Manpower, Marsh McLennan, OFG Bancorp, PepsiCo, Snap-On, Texas Capital, Travelers, U.S. Bancorp & Webster Financial all report earnings before Thursday’s opening bell, followed by Netflix, Bank OZK, F.N.B., Interactive Brokers, Simmons First National & Western Alliance Bancorp after the closing bell.
Friday the week winds down with Housing Starts & Building Permits data at 8:30 am & Consumer Senitment (prelim) at 10 am & 3M, Ally Financial, American Express, Autoliv, Charles Schwab, Comerica, Huntington Banc, Regions Financial, SLB & Truist report earnings.
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 ***