Volume Analysis ‘Flash Market Update’ — 9.25.23
Last week, the S&P 500 breached the lower threshold of its inside bar support, falling to 4320, just slightly below the intermediate support level at 4325. Moreover, the NYSE Advance-Decline Line also dipped below its uptrend line. The iShares Russell 2000 ETF, representing the troops, led the retreat with a -3.78% drop. The NDX 100, representing the generals, wasn’t far behind, experiencing a -3.30% decline. From their peak in late July, the troops have now fallen over 10%.
Despite the breadth and price action being rather destructive for the week, it’s worth noting that the accompanying volume was below average, with S&P 500 Total Capital Weighted Volume hovering just over $80 billion. Downside Capital Weighted Volume was above average at $56 billion. Although larger than usual, the downside volume was slightly less than the previous week, even though the S&P 500’s price index dropped more than the previous week. These actions suggests that volume may not currently be supporting the price decline.
Looking ahead, for our positive fourth-quarter outlook to materialize as earlier anticipated, it may be imperative that the S&P 500 remains above the major support level at 4200. Perhaps even more importantly, S&P 500 Capital Weighted Volume and Capital Weighted Dollar Volume likely need to stay above their August lows to sustain solid uptrends. In summary, from a price and breadth perspective, the intermediate outlook may be becoming increasingly worrisome. However, when viewed from a volume and supply-demand standpoint, the bullish scenario appears to remain firmly intact.
Grace and peace my friends,
BUFF DORMEIER, CMT®
Historical references do not assume that any prior market behavior will be duplicated.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.