Volume Analysis | Flash Update – 7.27.26
Strengthening Core
The market finished lower on the week, but the story beneath the surface was more constructive than the headlines may have suggested. The S&P 500 Index declined -0.61%, yet the broader ranks held firm. Under the continuing shadow of the Iran war, renewed peace discussions, and ongoing concerns around the Strait of Hormuz, the market remains caught between relief rallies and distribution pressure. Recent reports point to renewed efforts by Pakistan and China to facilitate U.S. and Iran discussions, while shipping, oil prices, and regional security remain sensitive to the conflict’s next turn.
On Thursday, July 23rd, the S&P 500 broke beneath its 50 day moving average. Capital Weighted downside volume led upside volume, narrowly missing a 90% downside day with more than 88% of activity to the downside. That was the heaviest volume day of the week and volume was only average. Every other session traded on below average volume. In military terms, the bears fired their heaviest round on Thursday, but they did not bring enough ammunition across the full week to force a wholesale retreat.
For the week, volume was light, with 45% of Capital Weighted Volume to the upside and 55% to the downside. Upside volume was well below average, while downside volume was only average. Capital outflows were slightly above average, while total Capital Weighted Dollar Volume finished near average. Both the accumulated movements of Capital Weighted Volume and Capital Weighted Dollar Volume continued marching south, but at a tempered pace and still above the long-term trend. The supply lines are slowly leaking, but they have not yet gushed.
The S&P 500 Index closed beneath the July 10th wide range. However, Friday’s trading provided a modest counterattack, producing a higher high, higher low, and higher daily close. Similarly, after an opening downside gap, market breadth, measured by the NYSE Advance Decline Line, declined on the week but closed Friday above its Monday open and finished inside the July 10th range. Breadth retreated some this week but is still pressing the advance.
The field units revealed the broader story. The generals, represented by the Invesco QQQ Trust Series 1, declined -1.60% and closed nearly on the 685 support line, corresponding with the July 10th and June 12th lows. If the generals continue their retreat, the next support zone sits near 640. Volume was light, suggesting the selloff in leadership was not backed by overwhelming supply.
The troops, represented by the iShares Russell 2000 ETF, fell -0.98% but remain within the June 19th range and above support near 285. Importantly, the troops now lead the generals on a year-over-year basis. That is a notable command shift supportive of our broadening theme.
The broader ranks, represented by the Invesco S&P 500 Equal Weight ETF, finished slightly higher, up 0.09%. The S&P 500 equal weight is now also outperforming the cap-weighted S&P 500 year to date. The brass commanders, represented by the Schwab U.S. Dividend Equity ETF, advanced 1.15% and continued their march higher. Their strength reinforces the view that capital is rotating rather than fleeing outright. The belly of the market is still holding firm, even as mega-cap leadership loses some ground.
In the spirit of And Then There Were None, the list of vulnerable units did not expand this week. The generals retreated to their trench line, but the troops held above support, the equal weight ranks gained ground, and the dividend brass advanced ground. This is not the profile of a full battlefield collapse, more of a silhouette of rotation gaining command.
Cross-asset markets remain heavily influenced by the Iran war backdrop. Gold, silver, and oil all traded higher on the week. Oil flirted with 102 resistance before stalling on Friday. Modern portfolio theory is built around the benefit of negative correlations, but such relationships have been difficult to find over the past decade. Recently, however, energy and technology have begun to resemble a clear yin and yang relationship. As energy strengthens, technology leadership appears to face pressure and vice versa.
Overall, the generals and troops lost ground, but the belly of the market held firm. Most importantly, after the massive selling into strength during the final week of Q2, institutions so far appear reluctant to begin a broader liquidation sale. That could matter as we approach the seasonally weaker months of August and September heading into the midterm election period. For more in depth analysis, be sure to join my Midyear Outlook Thursday at 4:00 PM EST. Volume Analysis: 2026 Second-Half Market Outlook – Kingsview Investment Management
Risk Command
This week’s field report argues for discipline, not retreat. The generals are wounded, but the broader army remains intact. The S&P 500 has slipped below its 50 day moving average, and Capital Weighted Volume trends continue to soften. However, breadth has not broken, the troops remain above support, the equal weight ranks are outperforming, and the dividend brass continue advancing.
Investors should respect the warning from weakening volume trends while also recognizing the constructive broadening beneath the surface. Position sizing, diversification, and support discipline remain essential. If the Invesco QQQ Trust Series 1 holds 685, the iShares Russell 2000 ETF holds 285, and breadth stabilizes, the bulls may regroup. If those levels fail and capital outflows accelerate, defensive positioning may take a deeper priority.
For now, the generals are under pressure, but the army has not left the field. In markets as in war, the objective is not to win each and every battle. It is to manage risk before it manages you, defend critical ground, and allow volume to be our trailblazer.
Grace and peace,
BUFF DORMEIER, CMT
Updated: 7/27/2026. 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.
