Volume Analysis | Flash Update – 12.2.24

Thanksgiving Battlefield Report

In a shortened Thanksgiving week skirmish, the Troops led a minor price advance, yet intelligence suggests ongoing distribution underneath the surface (see last week’s VAFU report). Here’s the tactical breakdown:

Command Units:

• SPDR S&P 500 ETF (SPY): Advanced 1.18%

• Invesco QQQ Trust (QQQ): Lagging behind but gaining 0.78%

Support Battalions:

• Invesco S&P 500 Equal Weight ETF (RSP): progressing up 1.13%

• Schwab US Dividend Equity ETF (SCHD): this week’s weakest regiment, inching up 0.61%

Ground Troops:

• iShares Russell 2000 ETF (IWM): Advancing 1.30%, showing strength among the ranks

Despite the apparent advance, our reconnaissance reveals potential vulnerabilities: Although S&P 500 prices finished up, nearly 65% of the S&P 500 Capital Weighted Volume was to the downside. Additionally, S&P 500 Capital Weighted outflows slightly outpaced inflows. Meanwhile, the NYSE Advance-Decline hit new highs on the week, closing at a new all-time weekly high. Volume may be retreating short-term, yet it, along with all our leading indicators and price, all remain in strong uptrends.

In this brief Thanksgiving week engagement, we’ve witnessed a divergence between the lagging movements of our command units and the hesitation in our supply battalions and new leadership within the ground troops. The Capital-Weighted Volume intelligence suggests potential supply line liquidity issues, with more resources moving away from the front than towards it. However, the NYSE Advance-Decline Line’s new high indicates broad participation in the overall campaign, potentially offsetting the short-term volume concerns since the Trump bump. Our long-range reconnaissance (leading indicators) continues to paint a picture of potentially favorable terrain ahead.

Overall, while the generals have secured minor gains in this week’s limited operations, the conflicting signals from our volume may warrant heightened vigilance. The retreat in volume amidst price advances suggests a potential regrouping of opposing forces. Nevertheless, with our leading indicators and price action maintaining their upward trajectory, the overall strategic outlook remains positive. Troops may consider maintaining their positions but stay alert for any shifts in the battlefield dynamics. As we move into the next phase of Christmas operations, close monitoring of volume patterns and breadth movements (market internals) will be crucial for anticipating potential counteroffensives or opportunities for further advancement. Maintain battle readiness and stand by for further updates. Over but never out.

Grace and peace my friends,

BUFF DORMEIER, CMT

Updated: 12/2/2024. 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.