Volume Analysis | Flash Update – 3.10.25
Failing momentum or is a powder keg brewing? Part 3
This past week our market forces executed a headlong retreat. The week began with a bear onslaught wiping out the previous Friday’s (2/28) 99% bullish Capital Weighted Volume & Dollar Volume day. On Monday, March 3rd, the bears launched a formidable offensive, with 91% of Capital Weighted Volume plunging to the downside and a staggering 99% of Capital Flows following suit. However, amidst the wreckage of this past week’s engagement, our reconnaissance has detected glimmers of hope concealed within the otherwise bleak data.
The infantry, iShare Russell 2000 ETF (IWM), suffered the heaviest casualties, retreating -4.05%. The commanding officers, Invesco QQQ Trust (QQQ), weren’t far behind, losing ground at -3.22%. Our main battalion, the SPDR S&P 500 ETF (SPY), fell back -3.07%, while their equal-weight counterparts showed more resilience, losing only -1.94%. Once again, our dividend brass commanders, Schwab US Dividend Equity ETF (SCHD), held the line, with losses of just -0.28%.
Despite the intensity of the enemy’s advance, our volume intelligence reports suggest the bears did not fully dominate the battlefield as price may have indicated. S&P 500 Capital Weighted Volume tallies remained just above average, with bearish outflows accounting for just 58% of the movement. Capital Weighted Volume showed even more resilience, conceding only 53% to the downside. Surprisingly, upside volume was slightly above average for the week. This misalignment between our S&P 500 Capital Weighted Volume statistics and the -3.07% SPY price retreat could be interpreted as a bullish omen.
While volume held its ground better than price this week, we must acknowledge volume’s gradual divergence from the bullish price trend observed since March of 2024. This week’s downside volume was enough to push accumulative volume below its trend, neutralizing our formerly bullish position. This marks the second breach since September 2024 of Accumulative Capital Weighted Volume since its January 2023 breakout. However, Accumulative Capital Weighted Dollar Volume and the NYSE Advance Decline line are still, ever so slightly, holding above trend support. A failure at these critical levels would create the conditions defining a volume analysis bear market.
Our volume sentiment indicators suggest we may be nearing capitulation extremes. The Volume Price Confirmation Indicator (VPCI) for both the QQQ’s (generals) and the SPY has met the VPCI V Bottom setup conditions that typically precede capitulation. The VPCI capitulation reentry trigger occurs when the VPCI turns back up from these depressed conditions crossing back above its lower Bollinger Band. The VPCI V Bottom step ups now in place, we will now await the VPCI reentry trigger, which may possibly signal the emergence of a potential counteroffensive.
On the battlefield map, the S&P 500 has established a defensive line at its former July 2024 highs of 5670. Friday, our commanding officers (QQQ) rallied after kissing the 480 support (both inline and trendline) previously identified in last week’s report. Meanwhile the infantry (IWM) are regrouping above the 200 mark after losing their critical 210 stronghold position. Overall, these subtle indications suggest that while our forces have suffered significant losses, the battle may not be entirely lost. The data under the surface could prove crucial in the next move on the financial battlefield. In conclusion, while the price action appears to paint a bleak picture, our volume and sentiment indicators suggest that a ceasefire may be on the horizon.
Grace and peace my friends,
BUFF DORMEIER, CMT
Updated: 3/10/2025. 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.
