SPY, the SPDR S&P 500 ETF gained +0.98% this past week, while the VIX closed at 15.09, indicting an implied one day move of +/-0.95% & an implied one month move of +/-4.36%.
Their RSI is trending downward & currently sits at 65.66, while their MACD is bullish following Wednesday’s gap up session, but it should be noted that it is very muted per its histogram.
Volumes were -0.14% below the prior year’s average (60,744,000 vs. 60,831,032), which calls into question the strength of the move higher on the week, given that Wednesday’s gap up led to an immediate consolidation period.
Monday the week kicked off with a hint of uncertainty in the air, as SPY opened slightly lower, was unable to get anything together to move higher & the day resulted in a decline of -0.2% on low volume.
The session also resulted in a spinning top candle, indicating that there was a good deal of uncertainty in the air & that market participants were waiting on an upside/downside catalyst.
Tuesday opened on a gap up, retraced into Monday’s real-body range, but powered higher on the second highest volume of the week to close +1.06% higher on the day.
Wednesday brought more murkiness to SPY’s chart, as a gap up open ultimately resulted in a doji candle, indicating that market participants were slightly uneasy, but the similar opening/closing levels show that Buyers & Sellers were happy to meet at about the same price, signaling temporary equilibrium.
Thursday opened lower, but bulls reluctantly stepped in & pushed SPY +0.0.1% higher on the day, as wait & see became the story.
Friday’s session opened on a gap higher, but profits were taken on the highest volume session of the week for a decline of -0.23% on the day & the cracks began to be exposed.
The upside case for this week & SPY is the same as it has been for weeks-to-months now, as SPY continues to squeak out record highs.
It’s beginning to appear more fragile than its been in the past though, but this isn’t anything that hasn’t been said before & its still managed to push higher, but it bares repeating.
Given the low amount of economic information & earnings reports this week it is most likely that any additional new highs will be a result of gap ups, similar to what we’ve seen so many times now, and still an indicator of uneasiness among market participants.
Also, as mentioned each week, there will need to be stronger advancing volume that is consistent for any further upside movements to remain sustainable.
The consolidation case looks to be a closing of the window that formed on Wednesday’s gap up, while SPY awaits an upside or downside catalyst & oscillates around the 10 day moving average.
Assuming the 10 DMA can catch up to price, this is likely to occur this week while we await Friday’s Fed Chair Powell Jackson Hole remarks, but there are a number of other Fed speakers this week as well.
The downside case occurs when the 10 DMA’s support breaks down, which conveniently is possible given that historically over the past ~3 years, the price zone that SPY’s 10 day moving average is in has been Seller dominated at a rate of 1.5 Sellers : 1 Buyer.
In this case, the 50 DMA’s support will also be challenged, and it too lies in the same $620-624.99/share price zone that has been marked by bearish Seller oriented behavior.
Should this occur, the $619.29/share level is the last hope before all eyes should look to the$609.59/share support level.
Should it escalate to that point, the window from late June 2025’s gap up comes into view & may be closed shortly after, but that’s not an area of focus just yet.
SPY has support at the $639.85 (Volume Sentiment: Sellers, 1.5:1), $637.32 (10 Day Moving Average, Volume Sentiment: Sellers, 1.5:1), $620.64 (50 Day Moving Average, Volume Sentiment: Sellers, 1.5:1) & $619.29/share (Volume Sentiment: Buyers, 1.8:1) price levels, with resistance at the $646.19/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF added +0.49% last week, as market participants were not overly eager to jump into the tech-heavy index.
Their RSI is also retreating back towards the neutral 50-mark & is currently at 64.24, while their MACD is narrowly bullish & looking primed to cross the signal line bearishly by mid-week.
Volumes were +6.59% above the prior year’s average (42,000,000 vs. 39,404,008), which should be paid attention to given that the two highest volume sessions of the week were Thursday & Friday’s declines.
Monday opened the week up on a sour note for QQQ, but the day’s upper shadow indicated that there was some untapped upside sentiment still among market participants.
Tuesday this became clear when a gap up open retraced into Monday’s real body range, but bulls came out & were able to force QQQ’s price higher & the session closed near the day’s high, gaining +1.26% on the day.
Wednesday is where things began to unwind though & uneasiness crept into the market.
The session opened on a gap up, but faults emerged & the day closed lower than it opened, despite gaining +0.05% day-over-day.
Thursday opened on a gap down, and the second highest volume session of the week was a mix of profit taking & speculation, as QQQ was able to march higher than it opened & briefly cross back above the $580/share level, before closing down -0.08%.
Friday the profit takers re-emerged, as the session resulted in a -0.44% decline & the candle’s lower shadow indicates that there was still some negative sentiment in the air & that QQQ is beginning to look more appealing at a lower price.
Similar to SPY, QQQ’s upside case involves a new all-time high & will require an influx of advancing volume that is consistent in order to remain sustainable.
The consolidation case focuses on oscillating around the 10 day moving average while awaiting an upside or downside catalyst, which seems likely to be how we spend much of this week based on the earnings reports & economic data that is scheduled for release.
The downside case emerges with the breakdown of the 10 day moving average’s support.
In the event that the 10 DMA’s support level breaks down things get a bit more interesting for QQQ on the downside, as their next two support levels (one being the 50 day moving average) live in the $550-554.99/share price zone, which is Seller dominated at a rate of 1.28:1 over the past year.
The next support level should that break down is the $539.40, which is ~-6.6% below Friday’s closing price.
This becomes more interesting because it then opens QQQ up to refill the window created by the gap of late June 2025.
QQQ has support at the $574.63 (Volume Sentiment: NULL, 0:0*), $572.60 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $553.41 (50 Day Moving Average, Volume Sentiment: Sellers, 1.28:1) & $551.68/share (Volume Sentiment: Sellers, 1.28:1) price levels, with resistance at the $583.32/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM the iShares Russell 2000 ETF advanced +3.09% last week, as the small cap index was the favorite of the four majors.
Their RSI is trending back down towards the neutral 50-mark, while their MACD is bullish, but beginning to curl over towards the signal line in the wake of Friday’s declines following Thursday’s gap up.
Volumes were +30.13% higher than the prior year’s average (39,680,000 vs. 30,492,460), which will prove to be something to watch given that the highest volume session of the week by a long-shot was a declining session.
Monday opened up on uneasiness, but there was a glimmer of optimism with the upper shadow on the day’s candle, which led to the advance of Tuesday & Wednesday.
Tuesday opened on a gap higher, tested lower, before rallying to close out the day +2.97% higher day-over-day on the week’s second highest volume; folks were hopping back into the pool.
It should be noted that this took IWM’s price higher away from the nearby support of the 10 day moving average, which will be important to recall shortly.
Wednesday also featured another gap up open & IWM closed +1.94% higher on the day, but as you can see, volume wanted day-over-day, indicating that there was limited gas in the tank.
Thursday profits began being taken from the table & in high demand, as the weel’s highest volume session began the unraveling of a strong week for IWM.
While the day resulted in a dragonfly doji which can hint at upside sentiment still being in tact, Friday’s session resulted in a bearish engulfing candle to conclude the week, as risk-off into the weekend was a major theme for small caps after a robust week.
It should also be noted that while Friday’s session was not stronger volume wise than Thursday’s, the day’s low was lower, indicating that there was more bearish appetite in the market.
IWM’s upside case differs from SPY & QQQ’s, as they are further removed from their all-time high, but their performance will help/hurt IWM’s upside case as they’ll be taken as a symbol of overall market confidence, which will boost/drop the small cap index.
The consolidation case gets a little fuzzy, as the window from Wednesday’s gap up will likely house it’s outter limits while the 10 day moving average plays catch up.
The downside case for IWM has a few major parts, first being that the short & medium term trand lines are providing support for IWM, but will be moving with it in the declining case.
In the event of a breakdown of these two levels, something a bit more sinister emerges, the $212-215.99/share price zone.
The issue with this zone is two-fold; one being that it is historically a Seller dominated zone at a rate of 1.24:1 Sellers:Buyers, and two that it houses both the long-term trend line (200 day moving average) & the $212.90/share support levels, which there are two touch-points for.
If Sellers emerge in droves & break down the 200 day moving average’s support, that $212.90/share level becomes the new downside gatekeeper, with a support touch-point at $212.34 before attention should be turned to the $209.55/share level.
IWM has support at the $226.71 (Volume Sentiment: Buyers, 1.06:1), $226.04 (Volume Sentiment: Buyers, 1.06:1), $225.37 (Volume Sentiment: Buyers, 1.06:1) & $224.60/share (Volume Sentiment: Buyers, 1.06:1) price levels, with resistance at the $229.55 (Volume Sentiment: Buyers, 1.56:1), $231.46 (Volume Sentiment: Buyers, 1.56:1), $240.47 (Volume Sentiment: Buyers, 0.4:0*) & $243.05/share (All-Time High, Volume Sentiment: Buyers, 0.4:0*) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF climbed +1.72% last week, as the blue chip index reached another all-time high on Friday, despite closing lower than it opened for the day.
Their RSI isrelatively flat at the 60.73 mark, while their MACD is currently bullish after Friday’s crossover, but may well porpoise as the week goes on.
Volumes were +52.78% above the prior year’s average (4,948,000 vs. 3,238,571), which will be something worth watching heading into the new week as the top three highest volume sessions all came on advancing days & it will be interesting to see how much of that money is true “buy & hold” & how much will see profits taken.
Monday DIA began the week opening higher, but being unable to be supported by the 10 day moving average & ultimately crashed through it & closed below it, with the day’s lower shadow signaling that there was appetite for DIA to be below $440/share before bulls stepped in.
It should be noted that Monday’s candle also formed a bearish engulfing pattern with Friday’s, which signals that all is not well under the hood for even the blue chip index.
Tuesday opened higher & in-line with the 10 day moving average, and took off to the races higher gaining +1.06% on the day, leading into Wednesday’s gap up open that advanced day-over-day +1.07%.
Wednesday’s session also produced the week’s highest volume, which will be interesting to see how long that money actually stays in the blue chip index.
Thursday opened midway between Wednesday’s range, tested lower before testing & failing to break higher than Wednesday’s close & settling down to close higher than it opened, but forming a bearish harami pattern & signaling that there is weakness in the air.
Friday also added some complexity to DIA’s situation, as a gap up open quickly fell apart & the day closed lower than it opened for an advance of only +0.14% on the week’s second highest volume.
These elevated advancing volume levels could form the base for running higher if DIA can continue them in the coming weeks, which will be needed to continue setting new all-time highs.
The consolidation case at these levels focuses on the window created on Wednesday & the 10 day moving average, with oscillations around the two taking place in anticipation of an upside or downside catalyst.
The declining case here is tricky, as the 10 DMA is in a Seller oriented price zone ($440-443.99; 1.24:1), meaning that the consolidation case could quite possibly lead to the decline case, which would likely be the result of the profit taking from last week mentioned above.
Should this take place, the 50 day moving average becomes the focal point, and in the event of a breakdown there the $433.14/share becomes the gatekeeper, as if $431.99/share is reached then DIA re-enters another Seller zone & suddenly the 200 day moving average is within close proximity.
At that stage the strength of the long-term trend becomes a key point of interest.
DIA has support at the $446.55 (Volume Sentiment: Buyers, 2.73:1), $446.27 (Volume Sentiment: Buyers, 2.73:1), $443.70 (10 Day Moving Average, Volume Sentiment: Sellers, 1.24:1) & $439.40/share (Volume Sentiment: Buyers, 1.6:1) price levels, with resistance at the $449.98 (Volume Sentiment: Buyers, 9:1) & $452.05/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday the week begins with Home Builder Confidence Index data at 10 am.
Riskified reports earnings before Monday’s opening bell, before Fabrinet & Palo Alto Networks after the session’s close.
Housing Starts & Building permits data comes out Tuesday morning at 8:30 am.
Tuesday morning kicks off with earnings from Home Depot, Cardinal Health, Circle Internet Group, eToro Group, HUYA, MSG Sports, On Holding, Paysafe, Sea Ltd., Smithfield Foods, Tech target & Tencent Music, before Jack Henry, James Hardie, Keysight, La-Z-Boy, Sociedad Quimica y Minera, Toll Brothers & ZTO Express report after the closing bell.
Wednesday brings us the Minutes of the May FOMC Meeting at 2pm.
Alcom, Analog Devices, Baidu, Dycom, Estee Lauder, GDS Holdings, Kingsoft Cloud, Lowe’s, Target & TJX all report earnings before Wednesday’s session’s open, with Coty & Nordson reporting after the close.
Initial Jobless Claims & Philadelphia Fed Manufacturing Survey data are released Thursday at 8:30 am, before S&P Flash U.S. Services PMI & S&P Flash U.S. Manufacturing PMI data at 9:45 am and Existing Home Sales & U.S. Leading Economic Indicators data at 10 am.
Thursday morning features earnings from Walmart, Bilibili, Canadian Solar, Scan source & The Marzetti Company, followed by Intuit, Ross Stores, Workday & Zoom Communications after the closing bell.
There is no major economic data for release on Friday & BJ’s Wholesale & Buckle report earnings before the session’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 ***