Volume Analysis | Flash Update – 5.5.25

Volume Analysis Update: Strong Momentum Low Munitions

Once again, the generals, Invesco QQQ Trust (QQQ), led the bullish battalion into the fray, advancing 3.44% as they charged ahead of the rank and file troops, iShares Russell 2000 ETF (IWM), who followed closely with a 3.28% gain. The brass commanders, representing broader leadership, advanced more cautiously: the Invesco S&P 500 Equal Weight ETF (RSP) climbed 2.65%, while the Schwab U.S. Dividend Equity ETF (SCHD) secured a modest 1.52% gain. Yet, despite the gains across the front lines, the ammo behind the advance—volume and capital—remained conspicuously light, even thinner than the prior week’s already depleted supply.

Aside from the record-setting barrage of upside volume firepower on April 9th, the campaign has been advancing with underwhelming reinforcements. The strategic stronghold at SPX 4800 was defended effectively—likely by the market’s strong hands, buying or covering near the April 9th lows. Yet these same battle-hardened investors have shown little appetite to press the attack above SPX 5500.

Nonetheless, even with limited logistical support, the surge was potent enough to lift both Capital Weighted Volume and Capital Weighted Dollar Volume (Capital Flows) above trend lines—marking a tactical shift in this campaign. The move reclassifies the market in our view from a capitulation-fueled rebound to a volume-confirmed bull market advance. However, this return to bull market territory is only marginally above the threshold, positioning the current setup as more neutral than full-force bullish—still, a remarkable turnaround from the dire positioning seen just one month ago when indicators were retreating decisively.

With the S&P 500 now having breached and occupied my previous targeted objective zone of 5600–5650, resistance outposts now await at 5800. Conversely, the 5600–5650 level has transitioned into the new defensive line of support. The troops (IWM) appear to have fortified their range, reestablishing supply lines between 190 (support) and 210 (resistance).

But perhaps the most strategic battleground remains with the generals—the QQQs. They have carved out renewed support trenches at 460. Should the generals manage to break and hold above the 500 resistance barricade, it may signal a formidable advantage for the bulls.

In total, this advance feels, in our estimation, overextended, having marched too far, too fast without robust supply chains. A healthy regrouping or tactical consolidation may be necessary before any sustained assault on higher ground.

Grace and peace my friends,

BUFF DORMEIER, CMT

Updated: 5/5/2025. 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.