SPY, the SPDR S&P 500 ETF gained +1.57% last week, while the VIX closed at 14.76, indicating an implied one day move range of +/-0.93% & a one month implied move range of +/-4.27%.
Their RSI has recently begun to downtrend from near overbought levels, currently sitting at 67.74, while their MACD is bullish, but waning & signaling that it may be a short-term signal cross & a “dolphin” situation.
Volumes were +12.07% higher than the previous year’s average levels (70,000,000 vs. 62,458,640), which helped SPY continue higher to set another all-time high on Friday.
Monday the week opened up on a note of cautious optimism following a big risk-off Friday session, forming a bullish harami star with Friday’s candle, on weak volume as market participants were still feeling skeptical.
Tuesday saw additional muted volume & slight gains.
Wednesday opened on a gap up with the highest volume of the week, accounting for much of the week’s gains, but it also flashed a warning signal as the session closed lower than it opened, an indication of unease & near-term profit taking.
Thursday also saw another gap up open & SPY continued to climb higher throughout the day, but Friday saw reality come creeping back into the marketplace.
Friday’s session produced the second highest volume of the week, and flashed warning signs as it formed a bearish harami cross with Thursday’s session’s candle & there was a clear risk-off sentiment & profits taken for SPY.
The session’s high was unable to breach the $660/share mark.
Heading into a new week the upside case continues on as it has for months now, in order to see continued new all-time highs there will need to be consistent, elevated advancing volume.
Last week’s volume levels were a step in the correct direction, but there will need to be continued higher levels in order to keep SPY marching higher.
The consolidation case is likely to see the $660/share level be significant mentally & price may be held up & range bound while the 10 day moving average catches up to price, before price oscillating around it awaiting the upside or downside catalyst (likely to be Wednesday, courtesy of the FOMC).
The downside case still hinges on the strength of support from the 50 day moving average, partcularly as it continues climbing higher & is approaching their second support levels ($639.85).
If those give out, all eyes go to $619.29/share & if that is unable to provide SPY with support then $609.59/share comes into play.
There is historic Buyer sentiment at that level (3.83:1 over the past ~3 years) which is helpful, but there are Seller zones to pass through on the way down that lead SPY to that support zone of $609.59-607.15.
The table below outlines SPY’s historic volume sentiment & can be used to assess the strength/weakness of support/resistance levels in retests.
SPY has support at the $649.18 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $639.85 (Volume Sentiment: Sellers, 1.25:1), $636.82 (50 Day Moving Average, Volume Sentiment: Sellers, 1.25:1) & $619.29/share (Volume Sentiment: Buyers, 1.8:1) price levels, with resistance at the $659.11/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
QQQ, the Invesco QQQ Trust ETF advanced +1.84% for the week, as the tech-heavy index was the favorite among the major four indexes.
Their RSI is trending towards overbought territory, currently sitting at 66.17, while their MACD is bullish.
Volumes were +16.26% higher than the prior year’s average (47,038,000 vs. 40,458,960), which was able to keep QQQ grinding higher, but the week still had elements of risk awareness.
Monday closed lower than it opened, forming a bearish harami with an upper shadow that showed that there was still a bit of upside sentiment in the air.
Tuesday opened on a gap up, but again closed lower than it opened as it seemed that profits were being taken quickly to mitigate risk near these all-time highs.
Wednesday also opened on a gap higher following Oracle’s earnings report Tuesday night, but quickly saw profits taken & the session also closed lower than it opened, only ganing +0.03% for the day.
This cautious outlook continued on into Thursday, as QQQ closed the day up +0.58% & the day closed as a dragonfly doji, indicating that there was potentially going to be more room to run higher.
Friday the week wound down on a gap up open, but indecision was abound & QQQ closed as a spinning top,shy of the $590/share mark.
Moving into the new week the upside case remains the same as it has been for months now, in order to continue hitting new all-time highs there will need to be increased & consistent advancing volume.
The consolidation case features QQQ oscillating around the 10 day moving average & between it & the 50 day moving average as that draws nearer while awaiting an upside/downside catalyst (also, likely to come Wednesday courtsey of the FOMC).
To the downside, historic volume sentiment (shown in the table below) has shown increased Seller pressure in the past year near these prices, which if the support of the 50 day moving average gives out would help guide prices down to re-test the $558.84 & $6551.68/share support levels.
While both of those reside in a Buyer zone (6.25:1 over the past year), should they fail QQQ enters another Seller zone (1.28:1), and will begin to look to close the window from the gap in late June.
QQQ has support at the $583.32 (Volume Sentiment: Buyers, 2:0*), $576.82 (10 Day Moving Average, Volume Sentiment: Sellers, 1.3:1), $574.63 (Volume Sentiment: Buyers, 1.79:1) & $567.96/share (50 Day Moving Average, Volume Sentiment: Sellers, 1.28:1) price levels, with resistance at the $587.86/share (All-Time High, Volume Sentiment: NULL, 0:0*) price levels.
IWM, the iShares Russell 2000 ETF added +0.24%, as the small cap index had the weakest week of the four majors.
Their RSI is trending back towards neutral, currently at 62.35, while their MACD is set to bearishly cross the signal line within the beginning of the week.
Volumes were +22.61% higher than the prior year’s average (38,106,000 vs. 31,078,080), which should raise eyebrows given that the highest volume session of the week was Friday’s declining sessions & two of the other sessions were also days of decline.
Monday the week opened on a gap higher & sparked optimism with a dragonfly doji candle, but it should be noted that this was the weakest move of the week by volume.
Tuesday opened on a gap lower, retested down the 10 day moving average’s support, but was able to hover above it heading into the close, as profits from the two prior sessions were yanked out of IWM.
Wednesday opened slightly higher & made a push higher, but ultimately crashed down to retest the 10 DMA’s support again, briefly breaking below it, before ultimately closing above it but down -0.18%.
Thursday opened in-line with the 10 day moving average, but was able to rally throughout the session to close +1.85% higher on the day, on the week’s second highest volume, which led to Friday’s highest volume of the week risk-off profit taking session that declined -1.02%.
As highlighted in prior weeks, the upside case for IWM echos that of SPY & IWM, except it also hinges upon the performance & enthusiasm behind the larger cap indexes, as with valuations as high as they are smaller cap names are less favored to their larger peers.
Their consolidation case looks set to osillate around the 10 day moving average while we await an upside/downside catalyst.
To the downside, IWM does have a good deal of support levels between $225.37-229.55, including the 50 day moving average at $226.95 (and climbing higher).
In the event that that support zone listed above breaks down, the $212.90/share level will be a key place to focus on, given there are two support points there in the past year & it is in a Seller oriented zone, historically, which may be cause for further concern.
IWM has support at the $236.78 (10 Day Moving Average, Volume Sentiment: Buyers, 2.1:1), $229.55 (Volume Sentiment: Buyers, 1.27:1), $226.95 (50 Day Moving Average, Volume Sentiment: Buyers, 1.09:1) & $226.71/share (Volume Sentiment: Buyers, 1.09:1) price levels, with resistance at the $240.47 (Volume Sentiment: Buyers, 0.4:0*), $240.93 (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 climbed +0.95% for the week.
Their RSI is trending back towards the neutral 50-mark, sitting currently at 60.88, while their MACD is losing steam on the histogram, looking set to cross the signal line in the next few days.
Volumes were +53.31% higher than the prior year’s average (5,184,000 vs. 3,381,400), which should prove interesting as there were more advancing than declining sessions.
Monday the week opened up in line with the 10 day moving average, tested lower, but ultimately advanced +0.27% on the day.
Tuesday opened in a similar range, tested lower briefly before powering higher to close up +0.4% on particularly strong volume.
Wednesday opened lower, but profits were taken & the session drifted lower throughout the day, dipping below the support of the 10 DMA briefly, but closing in-line with it.
Thursday DIA delivered the best volume performance of the week & risk was back in fashion as DIA closed +1.31% for the day.
Friday is where things began to become more bleak & uncertainty had clearly begun to spread, as DIA opened lower & closed the day as a bearish harami pattern on the weakest volume of the week.
Heading into a new week that will be an important area to watch for the blue chip index.
The upside case for DIA remains as it has been & similar to SPY & QQQ, if there can be consistent advancing volume to support higher prices the blue chip buy & hold index can continue to roll higher.
In the event of complacency & consolidation, look for DIA to oscillate around the 10 day moving average &449.98/share price level while awaiting a catalyst to the upside/downside.
To the downside, the 50 day moving average is creeping higher towards the price, and will be important to watch in the coming week(s) as a support level that may become resistance, as it takes 5x longer to move than the 10 DMA & may signal extended periods of decline.
Should support break down & DIA drop into the $443.99-436/share range there is Seller pressure over the past ~3 years, as shown on the table below, which may force price down towards the long-term trendline.
DIA has support at the $456.64 (10 Day Moving Average, Volume Sentiment: NULL, 0:0*), $449.98 (Volume Sentiment: Buyers, 2.09:1), $448.09 (50 Day Moving Average, Volume Sentiment: Buyers, 2.09:1) & $446.55/share (Volume Sentiment: Buyers, 2.24:1) price levels, with resistance at the $462.32/share (Volume Sentiment: NULL, 0:0*) price levels.
The Week Ahead
Monday the week kicks off with the Empire State Manufacturing Survey data at 8:30 am.
Hain Capital reports earnings Monday before the opening bell, followed by Dave & Busters after the closing bell.
U.S. Retail Sales, Retail Sales Minus Autos, Import Price Index & Import Price minus Fuel data is scheduled for release Tuesday at 8:30 am before Industrial Production & Capacity Utlization data at 9:15 am & Business Inventories & Home Builder Confidence Index data at 10 am.
Ferguson reports earnings before Tuesday’s opening bell.
Wednesday promises fun, with Housing Starts & Building Permits data at 8:30 am, before the much anticipated FOMC Interest Rate Decision at 2pm & Fed Chair Powell’s Press Conference at 2:30 pm.
Crack Barrel Old Country Store & General Mills report earnings before Wednesday’s opening bell, before Bullish reports after the session’s close.
Initial Jobless Claims & The Philadeplhia Fed Manufacturing Survey data come out Thursday at 8:30 am, followed by U.S. Leading Economic Indicators at 10 am.
Thursday begins with earnings from Darden Restaurants & FactSet, before FedEx & Lennar report following the sessions close.
The week winds down Friday with Fed President Daly speaking at 2:30 pm & there are no noteworthy earnings reports scheduled for release.
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 ***