SPY, the SPDR S&P 500 ETF dipped -0.04% last week, while the VIX closed at 15.36, indicating an implied one day range of movement of +/-0.97% & an implied one month range of movement of +/-4.44%.
Their RSI is trending down towards the neutral 50 level & sits at 59.22, while their MACD is bearish, but flat in the wake of Friday’s declines.
Volumes were -6.78% lower than the prior year’s average (57,446,000 vs. 61,621,031.8), which raises eyebrows given that more advancing sessions occurred last week than declines & Friday’s declining session had the highest volume.
Monday set the tone for calling into question the strength of SPY’s short-term trendline, as the session formed a bearish harami pattern with the prior Friday’s candle & closed right atop the 10 day moving average’s support.
Tuesday opened just lower than Monday’s close, but formed a bullish engulfing pattern with Monday’s candle, with neither session having particularly strong volume, indicating that there was certainly a pause on the horizon.
Wednesday opened slightly lower, but was able to advance +0.23% on even lower volume, indicating that there was more waning confidence among market participants.
Thursday opened on a gap higher, retraced into Wednesday’s range before charging higher, but left mixed signals.
Thursday’s session had the second highest volume of the week, which would normally be viewed as a sign of emerging confidence after the previous three days, but the candle resulted in a spinning top, indicating indecision.
Friday is when the fear broke out, with SPY opening lower than Thursday & testing down to near the 10 day moving average’s support, and closing for a -0.6% decline on the day.
Friday featured the highest volume of the week, indicating that there was limited appetite for risk heading into the weekend & that profits were being taken & that folks were preparing to hop out of the pool.
Moving into the new, short holiday week the upside case remains the same as in the notes of prior couple of months; without an increase in advancing volume that remains consistent then any new all-time highs are at risk to fall apart.
The consolidation case also remains the same, as SPY would just oscillate around the 10 day moving average awaiting for an upside or downside catalyst to push it in a direction.
In the event of a downside catalyst/move, we’ll see the 10 DMA break down first, which then directs attention to the 50 day moving average given that the next support level is in a Seller zone historically & is <1% lower.
Should the 50 DMA’s support hold up there could be a brief consolidation featuring oscillations between the 10 & 50 day moving averages, which would be the best case scenario.
In the event of further declines the $619.48/share is the last line of defense before the support of a consolidation zone with touchpoints at $609.59 & $607.15.
SPY has support at the $643.03 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $639.85 (Volume Sentiment: Sellers, 1.5:1), $629.70 (50 Day Moving Average, Volume Sentiment: BUyers, 5.4:1) & $619.29/share (Volume Sentiment: Buyers, 1.8:1) price levels, with resistance at the $649.48/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF declined -0.27% last week, faring the worst of the major four index ETFs.
Their RSI is trending down towards the neutral 50 mark & is currently at 52.22, while their MACD is bearish & looks set to diverge further bearish from the signal line in the coming week.
Volumes were +3.96% higher than the prior year’s average levels (41,578,000 vs. 39,995,000), mostly due to Thursday & Friday’s price action, which isn’t particularly telling about QQQ’s sentiment.
Monday the week began similarly to SPY’s, as a low volume session resulted in a bearish harami cross, that notably was unable to break above the 10 day moving average.
The gravestone doji also was a harbinger of near-term pain, as market participants decided that the fair valuation of QQQ was in the $570.32-.40 range based on the day’s open & close.
Tuesday opened lower, but was able to rally higher to close just below the resistance of the 10 day moving average, again on low volume.
Wednesday signaled that there was a bit more further confusion in the market, as QQQ opened just below Tuesday’s close, but was able to eventually break out above the resistance of the 10 DMA, but again, volumes were unimpressive.
Thursday opened on a gap higher, retraced down to the support of the 10 DMA, but eventually pushed higher to close +0.63% higher day-over-day on slightly higher volume.
The gap was short lived however, as it was filled immediately on Friday’s -1.16% declining session that featured the highest volume of the week, as like SPY, QQQ was showing cracks.
The week ahead’s landscape looks much like SPY’s & sounds exactly the same as the past couple of months’s message: the move higher needs sustainable advancing volume to accompany these new all-time highs.
It’s also worth noting the emerging bearish head & shoulders pattern, where Thursday’s session is the right shoulder.
Should this be true, then there are possibilities, the first being that we see a consoldation range emerge between & tightly around the 10 & 50 day moving averages, which are also getting quite close to one another & look to have a bearish crossover in the coming days.
In the event that there is a downside catalyst the $551.68/share level is important, as it is in a Seller dominated price zone, and is the gate keeper to the mid-June unfilled window.
In the event that QQQ attempts to fill that window & succeeds there are pockets of support along the way, but the 200 day moving average will be something to begin looking at & assessing the strength of in terms of a support level.
QQQ has support at the $561.65 (50 Day Moving Average, Volume Sentiment: Buyers, 1.74:1), $558.84 (Volume Sentiment: Buyers, 6.25:1), $551.68 (Volume Sentiment: Sellers, 1.28:1) & $539.40/share (Volume Sentiment: Buyers, 5.5:1) price levels, with resistance at the $571.14 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $574.63 (Volume Sentiment: NULL, 0:0*) & $583.32/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF advanced +0.14%, as the small cap index was the favorite among investors.
Their RSI is just below the overbought 70 Mark & sits at 64.4 currently, while their MACD is bullish, but appears to be bearishly curling over towards the signal line & is possibly at its local apex.
Volumes were -12.99% lower than the prior year’s average (26,646,000 vs. 30,623,175), which signals uncertain to complacent attitudes among market participants, as the highest volume sessions on the week were both declines.
Monday began the same as SPY & QQQ, as a bearish harami pattern emerged on a declining session that had the second highest volume of the week.
Tuesday opened higher & managed to continue higher on weak volume, leading to Wednesday’s lower open but rally to break out above the $235/share level.
Thursday is where things began to unwind, despite a gap up open as IWM began to decline, briefly dipping below the $235/share level but settling +0.12% day-over-day, while below the day’s open.
Friday the wheels officially came off & the highest volume session of the week resulted in a decline of -0.44% & set the stage for a difficult week ahead.
While IWM is not as close to its all-time highs as SPY & QQQ, it will move higher in tandem with these & DIA, so there will need to be in influx in advancing volume for the small cap index to continue higher.
The consolidation case at the moment features IWM oscillating around its 10 day moving average as we await a catalyst to the upside ro downside, which would also mean that the 10 & 50 DMAs would begin nearing each other (oscillations may begin to flutter between each as well).
The downside case for IWM is tricky, as it tends to oscillate around more than just outright climb higher like SPY & QQQ, so it has more frequent local support levels.
However, given that if faith in the larger cap names waivers that lack of optimism can easily spread over into the small cap index as well, which could prove problematic for IWM.
While Buyers have been resilient at most price levels below IWM’s Friday closing price historically, the $225/share level is the first place to be watching in terms of downside activity.
The $225.97-226.32/share level is the bottom of the window created in mid-August that remains unfilled.
In the event that we see that take place, eyes should begin focusing on the 200 day moving average, as the long-term trend will come into play, which makes for an interest set up as it resides in a Seller dominated zone, which also includes the two touchpoint $212.90 support levels.
IWM has support at the $231.43 (10 Day Moving Average, Volume Sentiment: Buyers, 1.56:1), $229.55 (Volume Sentiment: Buyers, 1.56:1), $226.71 (Volume Sentiment: Buyers, 1.06:1) & $226.04/share (Volume Sentiment: Buyers, 1.06:1) price levels, with resistance at the $240.47 (Volume Sentiment: Buyers, 0.4:0*) & $243.04/share (Volume Sentiment: Buyers, 0.4:0*) price levels.
DIA, the SPDR Dow Jones Industrial Average ETF fell -0.12% for the week, as even the blue chip names were not invincible.
Their RSI is trending downwards at 63.8, while their MACD is still bullish, but their histogram is beginning to show signs of weakening & will be something to keep an eye on in the coming week.
Volumes were +4.33% higher than the prior year’s average (3,444,000 vs. 3,301,111.11), which is unnotable, particularly given that they remained in a consolidation range.
Monday DIA kicked off the week with a bearish harami pattern forming during the week’s strongest volume session, followed by Tuesday opening on a gap lower but managing to recover & advance.
Wednesday opened higher & was able to climb higher, before Thursday gapped up on the open, but declined throughout the session & closed lower than it opened, for a gain of +0.17% on the day.
Friday opened on a gap down, saw buying & selling pressure, but ultimately closed -0.15% on the day as a doji candle, indicating that there was complacency & uncertainty abound.
Heading into the new week, the story remains the same for DIA to the upside, without sustained, elevated advancing volume there is going to be limited further upside.
Oscillations around the 10 day moving average mark the consolidation case.
The downside casefor DIA becomes tricky & depends greatly on the catalyst given the Buy & Hold nature of many of its components.
In the event of some major catastrophy there would likely be a significant flight to safety that impacts the structure of DIA in a major manner.
In the event of a regular pullback though, $446.27-446.55 will be an area to watch, as should they break down then the 50 day movingaverage is likely to fall, which leads to the 200 day moving average becoming the next area of interest, as it resides two support levels lower.
DIA has support at the $452.88 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $449.98 (Volume Sentiment: Buyers, 9:1), $446.55 (Volume Sentiment: Buyers, 2.73:1) & $446.27/share (Volume Sentiment: Buyers, 2.73:1) price levels, with resistance at the $457.87/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday the market is closed for the Labor Day holiday in the US., so there will be no economic data or earnings reports.
S&P Final U.S. Manufacturing PMI data comes out Tuesday at 9:45 am, followed by ISM Manufacturing & Construction Spending data at 10 am.
Tuesday morning’s earnings calls include Academy Sports + Outdoors, NIO & Signet Jewlers, with Zscaler reporting after the closing bell.
Wednesday begins with Fed President Musalem speaking at 9 am, Job Openings & Factory Orders data at 10 am, Fed President Kashkari speaking at 1:30 pm & the Fed Beige Book at 2pm.
Dollar Tree, Campbell Soup, Macy’s, REV Group & Sprinklr report earnings before Wednesday’s opening bell, before Salesforce, American Eagle, Asana, C3.ai, Credo Technology Group, Descartes, GitLab, Hewlett Packard Enterprise & Pager Duty report after the session’s close.
ADP Employment, Initial Jobless Claims, U.S. Productivity (revision) & U.S. Trade Deficit data come out Thursday at 8:30 am, followed by S&P Final U.S. Services PMI data at 9:45 am, ISM Services Data at 10 am, Fed President Williams speaking at 12:05 pm & Fed President Goolsbee speaking at 7pm.
Thursday morning begins with 1-800-FLOWERS, Brady, Caleres, Ciena, Endava, G-III Apparenl, Science Applications, Shoe Carnival & Toro before the session opens, with Broadcom, Argan, Braze, Copart, DocuSign, Guidewire Software, Lululemon Athletica, Phreesia, Samsara, ServiceTitan, Smith & Wesson Brands, UiPath & Zumiez reporting after the closing bell.
Friday the week winds down with U.S. Employment Report, U.S. Unemployment Rate, U.S. Hourly Wages & Hourly Wages Year-over-Year data at 8:30 am.
ABM Industries reports earnings before Friday’s 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 ***