Volume Analysis ‘Flash Market Update’ — 10.23.23

Backed by some of the heaviest downside Capital Weighted Dollar Volume we’ve seen this year, this past week the bears pushed the bulls closer to the key support level of SPX 4200. Capital Weighted Downside Volume saw a substantial outflow of over $61 billion for the week, dwarfing the inflow of just $21.6 billion. This marked the most significant weekly difference in favor of the bears in 2023, pushing Capital Weighted Volume back to levels last seen in the second quarter. Meanwhile, the Advance-Decline metric dropped below its March lows.

As mentioned last week, my attention is squarely focused on the performance of the troops, represented by the IWM Russell 2000 ETF. IWM closed the week lower at 166 but managed to hold just above the critical support level at 163. If the troops (IWM) breach this support, it could deal a severe blow to the bulls’ aspirations.

In summary, several key metrics are teetering on the edge of critical support levels: S&P 4200, IWM 163, and Capital-Weighted Volume 370. To salvage the situation, the markets need to rally here or risk sidelining the expected seasonal upswing.

Grace and peace my friends,

BUFF DORMEIER, CMT®

Updated: 10/23/2023

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