Volume Analysis | Flash Update – 2.2.26
Strange Brew
Markets often finish mixed, but this past week delivered a particularly strange brew. While headline price action appeared benign, the underlying rotation and volume behavior told a far more nuanced story. New highs were attempted, leadership fractured, and participation failed to fully confirm in some ways reinforcing the broadening we have highlighted previously yet differently than the first three weeks of January.
The S&P 500 capital weighted lieutenants, represented by the State Street SPDR S&P 500 ETF Trust, finished modestly higher on the week, up 0.35%. In contrast, the traditional leadership cohort, the Invesco QQQ Trust Series 1, finished slightly lower by -0.17%. The iShares Russell 2000 ETF, which has recently assumed leadership duties, pulled back more decisively, down -1.94%, consistent with the doji pause we have been monitoring. Meanwhile, the Schwab US Dividend Equity ETF emerged as the week’s commanding unit, advancing 2.28%, while the Invesco S&P 500 Equal Weight ETF slipped -0.37%.
This rotation is what makes the week unusual. Historically, when the generals retreat and the lieutenants and dividend commanders advance, equal weight participation typically confirms the move. This week, it did not. The ranks widened, but cohesion weakened.
From a volume and capital perspective, the holistic picture also lacked clarity, S&P 500 Capital Weighted Dollar Volume finished above average, with 58% of flows registering as inflows. Both inflows and outflows were elevated, signaling active repositioning rather than conviction buying. Capital Weighted Volume itself was only average across upside, downside, and total activity, an unusual outcome given the dense earnings calendar and a Federal Reserve meeting. While 58% of Capital Weighted Volume was to the upside, the lack of expansion suggests demand remains cautious yet still present.
Market breadth deteriorated on the surface, as the NYSE Advance Decline Line declined and closed near last week’s low, fully engulfed by the prior wide range bar. However, beneath that headline weakness, the NYSE operating companies only Advance Decline Line continued to press new all-time highs. This divergence reinforces the theme of internal broadening, but also underscores that leadership may be fragmenting.
Technically, the generals finally broke above the spinning top resistance that has capped progress since mid-December. That breakout, however, failed almost immediately. Price reversed sharply, producing a long upper shadow candlestick, a classic sign of upside rejection of the new highs and follow through distribution. While not as severe as last autumn’s gravestone doji that preceded the broadening revolt, it nonetheless signals hesitation at higher levels.
The troops mirrored this indecision. After breaking to new highs last week, they slipped just below short-term support, closing lower on the week but holding the critical 250 to 255 zone. Their candlestick structure resembles the same spinning top congestion that has constrained the generals for weeks, suggesting momentum is pausing rather than breaking. In sum, the technical data are not simply mixed, they are unsettled. Price continues to probe higher ground, participation widens, yet volume and capital fail to confirm sustained thrust. Fuel is dissipating even as the battlefield expands.
Risk Command
In environments like this, discipline matters more than direction. Broadening participation is constructive over the intermediate term while new highs respect. Investors should remain aligned with strength, but avoid overextending positions, particularly where volume confirmation lacks support. Maintain awareness of key support levels, including 6850 on the S&P 500, and be prepared for further rotation as earnings season progresses. Markets rarely move in straight lines, and when leadership splinters, patience and risk management become the most valuable assets in the campaign.
Grace and peace,
BUFF DORMEIER, CMT
Updated: 2/2/2026. 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.
