Last Friday some traders noticed the negative reversals in both the Spyder Trust (SPY) and the Invesco QQQ Trust (QQQ). For example, SPY closed at $606.32 on February 6 but opened higher last Friday at $606.89 before closing at $600.77, which was below the prior day’s low.From a technical standpoint that is not normally a positive sign as a more negative key reversal was formed at the start of the three-month correction in July 2023. A reversal was also formed Friday on the QQQ. Last week’s lows for both ETFs are now short-term support.
Market SummaryTom Aspray – ViperReport.comIn my weekend technical review, I noticed that three of the daily advance-decline lines that I follow closed below their daily MAs as noted by the red arrows in the table above. Only the Russell 2000 weekly A/D line is currently negative. Only IWM closed below its 20-day EMA. Both the SPY and QQQ closed near the midpoint of their weekly starc bands indicating they are neither overbought nor oversold.
Some may remember the stock market trading during the last Trump administration and especially the periodic trade comments that pushed stocks either sharply higher or lower. This article from Reuters outlines some of the key dates from the period. The choppy trading that we often saw during these four years was frustrating for investors who often sold or bought at just the wrong time.
This is probably how some investors are feeling right now as those who bought stocks in reaction to Trump’s victory may be having second thoughts. Their hopes for greater growth are being somewhat replaced by impatience, uncertainty, or even fear.
Spyder Trust MonthlyTom Aspray – ViperReport.comWhen my market outlook reflects choppy action as it does currently I have found that looking at the longer-term charts can often keep me in sync with the major market trend. The monthly chart of the Spyder Trust (SPY) continues to look strong after completing a bottom in October 2022. A year later the rising 20-month EMA was again tested after a three-month correction.
The monthly analysis of the S&P 500 Advance/Decline line was positive in November 2016 which was a positive sign for the stock market. This was also the case before last year’s election. It held above its rising WMA in October 2023 before moving above the resistance at line a (see arrow).SPY Weekly With A/D LinesTom Aspray – ViperReport.comThe weekly A/D lines are followed more closely as they will generally warn of more serious declines like the one that occurred in the last quarter of 2018 when the S&P 500 declined 13.5%. They will also help identify important buying opportunities.
The weekly S&P 500 A/D line moved to new highs and above resistance, line a, in mid-November of 2023. This was after the AAII bullish sentiment dropped to a low of 24.32% on November 2. By late January 2024 (line c) the NYSE All A/D line had also overcome its major resistance at line b, after moving further above its strongly rising EMA.
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