Volume Analysis | Flash Market Update – 7.15.24
And Then There Were None Part III
It was no longer the same old story; this past week, the markets sang a new tune and began a different dance, my friends.
In a sharp reversal, the troops (iShares Russell 2000 ETF, IWM) woke up from their prior slumber to lead the broad market’s charge higher. Meanwhile, it was the generals (Nasdaq 100) who fell into retreat. Once again, the action was empowered by surging Capital Weighted Volume, among the strongest Capital Weighted Volume flows since the pandemic.
Three weeks ago, I stated, “S&P 500 Capital Weighted Volume and Dollar Volume both blew their lids off….My experience observing such remarkably high downside Capital Weighted Volume corresponding with subdued prices could possibly be viewed as an omen of change.”
This last Thursday the 11th, the bears scored another strong 90%+ CW Dollar Volume Downside Thrust day on high Capital Weighted Volume. Over 95% of the capital flows were to the downside, creating another Bearish Engulfing Candle in the QQQ ETF (Invesco 100 Trust). Yet both troops (IWM) and the Invesco S&P 500 Equal Weight ETF (RSP) finished higher on the day. Specifically, IWM finished up 3.59%, while the generals, Nasdaq 100, fell -2.24% for one of the largest divergences between the two in market history. To close out the week on Friday the 12th, the troops’ strong price action followed through in spades, with even the Mega-caps joining in on the party with 80% of the CW capital flows to the upside.
Considering this past week’s strength came from the broader regions of the market, it is not surprising that market breadth excelled. The NYSE Advance-Decline Line surged, closing at a weekly high and now closing in on May’s all-time highs. Meanwhile, stocks in the Russell 3000 making new 52-week highs surpassed their December 2023 highs. For the week, upside capital flows led downside outflows on a 2:1 basis.
Overall, the formerly lagging troops finished the week up 6.11%, while our generals (Nasdaq 100) closed down -0.30%. The reversal was also felt in the S&P 500. The S&P 500 finished the week up 0.87% compared to RSP, which was up 2.96%. Meanwhile, the trend of capital-weighted outflows continues to strongly elevate. S&P 500 support and resistance remains the range held Wednesday the 10th to Friday the 12th, 5575 support / 5643 resistance. However, the troops (IWM) broke out of staunch 212 resistance closing at 213.The contrast between the troops and the generals is among the strongest in recent memory, suggesting a possible rotation of capital from the mega-caps into the rest of the equity market.
Grace and peace my friends,
BUFF DORMEIER, CMT
Updated: 7/15/2024. Historical references do not assume that any prior market behavior will be duplicated. Past performance does not indicate future results. This material has been prepared by Kingsview Wealth Management, LLC. It is not, and should not, be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate their ability to invest for the long term. Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser.
