Volume Analysis | Flash Update – 2.24.25
Failing momentum or is a powder keg brewing?
In another holiday-shortened campaign, our forces seemed poised to finally breach staunch resistance. However, Friday’s skirmish reset those expectations. We now face the possibility of either a strategic withdrawal or a decisive breakthrough, with compelling intelligence supporting both scenarios. Despite falling interest rates, the troops led this past week’s retreat, with the iShares Russell 2000 ETF (IWM) suffering a -3.68% casualty rate. The generals, Invesco QQQ Trust, were close behind, retreating -2.23%. Our brass commanders showed resilience, with the Invesco S&P 500 Equal Weight ETF (RSP) losing -0.71% and the Schwab US Dividend Equity ETF (SCHD) advancing 1.44%. These efforts compare favorably to the capital-weighted SPDR S&P 500 ETF (SPY), which fell back -1.61%.
The abbreviated battle week makes it challenging to accurately assess troop engagement. Nevertheless, bearish forces dominated 60% of the capital-weighted volume. Despite the short week, S&P 500 capital outflows indicated a significant retreat, with about 65% evacuating fortified positions. The bears’ most decisive victory came on Friday, when approximately 95% of capital-weighted volume and 97% of dollar volume favored the downside. The bulls, however, claimed a modest victory as total volume remained only average on this excessively lopsided day.
The troops (IWM) launched an early week assault on the 230 resistance stronghold but, after holding firm in the initial Friday counterattack, the troops were forced to fall back in the latter half of the engagement. Market breadth, as measured by the NYSE Advance-Decline Line, retreated below short-term support but maintains its steady advance. IWM has established a defensive line at 215-214. On the short and intermediate-term, IWM’s VMI (Volume Momentum Indicator) is entering oversold territory (60), where it has often rallied when caught in a no-man’s land (trading range).
The generals (QQQ) were executing a bullish saucer maneuver before Friday’s tactical retreat. They are not as battle weary as IWM and face support further afield at 510-500.
The crown jewel of the QQQ’s, NVDA, is set to report from the front lines this week. The reaction to this Nephilim’s dispatch could dictate the generals’ next marching orders. After taking a stone from David’s sling, on January 27th, NVDA’s daily VMI reached the oversold level of 60. Since then, the giant has since rallied strongly, no longer oversold on a daily basis. Yet, on the intermediate-term battlefield, despite the advance from 113 to 143, it remains slightly oversold with its VMI close to ranges typically associated with last stands. Meanwhile, NVDA’s VPMI (Volume Price Momentum Indicator) also shows signs of bearish fatigue. Needless to say, I will be closely monitoring the levels of these indicators as we approach NVDA’s report expected on Wednesday, the 26th.
Overall, resistance remains formidable across multiple echelons of the broader markets. Yet the S&P 500, S&P 500 Capital Weighted Volume, and Dollar Volume all maintain solid forward trends. The recent relative performance of the brass commander’s dividend division is intriguing. These quality soldiers can excel in bearish warfare tactics, and their recent show of strength is a noteworthy development warranting closer observation. Leading the charge, the generals remain in fighting form even after their failed breakout attempt. However, the Nephilim appear somewhat staggered and may need to regroup with their leader soon taking the brightest spotlight on the battlefield.
Grace and peace my friends,
BUFF DORMEIER, CMT
Updated: 2/24/2025. 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.
