Bonnie’s Market Update 5/24/24

Investors slowed buying last week, with only two of the eleven S&P SPDR sectors finishing higher. Technology (XLK) and Communications (XLC) were the strongest, while Real Estate Materials (XLRE) and Energy (XLE) were the weakest. The SPDR S&P 500 ETF Trust (SPY) gained +0.01%.

S&P SPDR Sector ETFs Performance Summary 5/17/24-5/24/24

052424 SPDR Sectors

Source: Stockcharts.com

Figure 2: Bonnie’s ETFs Watch List Performance Summary 5/17/24-5/24/24

052424 Bonnie’s ETF Watch List

Source: Stockcharts.com

Semiconductors and Technology led last week. China and Gold fell sharply, and International markets weakened. Transports continue to underperform since making a high in March.

Figure 3: UST 10YR Bond Yields Daily

UST 10 Yr Bond Yields Daily

Source: Stockcharts.com

The 10-year U.S. Treasury rose last week, closing at 4.467%. Yields falling would likely be positive for U.S. Equities. On the other hand, yields rising and closing above 4.75% could fuel selling pressure in U.S. Equities.

The major market averages were mixed last week. The Dow fell -2.33%, the S&P 500 eked out a slight gain up +0.03%, and the Nasdaq was up +1.41%, both positive for their fifth straight week. The Russell 2000 Index lagged, falling -1.24%.

Market Breadth Weakened

Weekly market breadth was negative on the New York Stock Exchange Index (NYSE) and for the Nasdaq. The NYSE had 888 advances and 2008 declines, with 410 new highs and 102 new lows. There were 1619 advances and 2964 declines on the Nasdaq, with 407 new highs and 298 new lows.

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 Figure 4: Weekly Value Line Arithmetic Average

052424 VLE Weekly

Source: Stockcharts.com

The top chart is the weekly Chart of the Value Line Arithmetic Index ($VLE), which includes approximately 1700 stocks. The longer-term uptrend from October 2022 (pink line) remains.

VLE fell by -1.55%, closing at 10321.78 after breaking the short-term March downtrend (green line) but failing to take out the March high of 10577.97 last week.

VLE continues to close above the rising 50-week MA (blue rectangle) and 200-week MA, which is positive. On the other hand, weakness would be a warning sign of a forthcoming short-term correction.

Support is 10000, 9600, 8900, and 8600. Resistance is at 10500 and 10600.

The odds of further upside in the short term will increase if VLE closes above the weekly high of 10517.24. On the other hand, a weekly close below 10200 would be short-term negative.

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 Figure 5: New York Stock Exchange (NYSE) New Lows

052424 NYSE New Lows Daily

Source: Stockcharts.com

Watching New Lows on the New York Stock Exchange is a simple technical tool that helps increase awareness of the direction of an immediate trend.

For most of 2022, new lows warned of a potential sharp pullback, high volatility, and “panic selling,” closing above 150. The peak reading of New Lows in 2022 was on 9/23 at 1106, not exceeded in 2023.

In 2024, New Lows have stayed below 150, and a good part of the year below 50, a sign of a healthy market.

Last week, New Lows on the NYSE rose to 41 (pink circle), remaining in a low-risk zone. If new lows stay between 25 and 50, it would be positive in the short term. On the other hand, an increase above 150 would be a warning sign of a market correction.

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 Small Caps Showing Weakening Momentum Bears Watching

 Figure 6: Daily iShares Russell 2000 (IWM) Price (Top) and 12-26-9 MACD (Middle and Money Flow (Bottom)

052424 IWM Daily

Source: Stockcharts.com

The top Chart is the daily iShares Russell 2000 Index ETF (IWM), the benchmark for small-cap stocks, with a 50-Day Moving Average (MA) (blue rectangle) and 200-Day Moving Average (MA) (red rectangle) that traders watch and use to define trends.

IWM peaked in March, fell below the 50-day MA in early April, and reversed in May. IWM closed at 204.44, failing to take out the high falling -1.27%, weaker than the S&P 500 last week.

IWM remains in an uptrend (orange line) and above the 50-day Moving Average.

Support is at 202.00 and 190.00. Resistance is at 207.50, 212.50, and 214.50.

MACD (middle chart) generated a sell, falling above 0, with weakening momentum.

Money flow (lower chart) moved sideways in mid-April, turning up in May, but is now trending down and not yet implying buying interest.

The odds of IWM testing the high despite the MACD sell will increase if IWM breaks the short-term downtrend (green dotted line and closes above the weekly high of 209.48. On the other hand, a weekly close below 202.35 would be negative.

Semiconductors and Technology Continue Higher

Figure 7: Daily Semiconductors (SMH) (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

052424 SMH Daily

Figure 7: Daily Semiconductors (SMH) (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

Source: Stockcharts.com

The top chart shows the Daily Semiconductors (SMH) ETF, concentrated mainly in US-based Mega-Cap Semiconductor companies. SMH tends to be a leading indicator for the market when investors are willing to take on increased risk, and the opposite is true when the market is falling.

The Semiconductor ETF (SMH) gained +6.08% and took out the 3/8 peak at 239.14, penetrating 235.00 resistance, before closing at 244.26. NVIDIA, the top holding at 20%, was up 15% for the week, and it sparked the rally after reporting record profits and a 10:1 stock split.

SMH remains above the 50-day (blue rectangle) Moving Average, a sign of underlying strength.

Support is 235.00, 227.00, 220.00, and 210.00. Resistance is at 246.00. With the strength in SMH, a new upside objective of 320.00 has been given based on the intermediate chart (not shown). A weekly close below 220.00 would negate the upside objective.

MACD (middle chart) remains on its buy, rising above 0 and showing strong momentum.

Money flow (lower chart) started falling in early May but turned higher into the latest rally (green arrow).

Further strength in SMH is positive for the broad market.

Figure 8: Daily Invesco QQQ Trust (QQQ) Price (Top) and 12-26-9 MACD (Bottom) and Money Flow (Bottom)

052424 QQQ Daily

Source: Stockcharts.com

The Chart shows the daily Invesco QQQ, an exchange-traded fund based on the Nasdaq 100 Index. QQQ made a low in October 2023 (red circle), followed by the start of an uptrend through April 2024, and then broken.

Nasdaq 100 (QQQ) rose last week, up +1.37%, closing at 457.95. It remains above the 50-day MA (blue rectangle) and the 200-day MA (red rectangle).

Support is at 455.00, 440.00, 430.00, 415.00, and 400.00. Resistance is at 460.00. The intermediate-term objective is 520.00 (chart not shown). A weekly close below 400 would negate the upside objective.

The bottom chart, MACD (12, 26, 9), remains on a buy, above 0, rising, and broke the December downtrend (green rectangle), which is positive.

Money flow (lower chart) turned up in April, breaking the downtrend. There was a brief turndown in May, but it immediately turned up, now overbought above 80 (orange line).

In Sum:

QQQ has had a solid rally from an oversold condition, making a new all-time high.  I would like to see QQQ remain above 455.00, implying potential further gains towards 520.00, the intermediate upside target.

Figure 9: The S&P 500 Index (SPY) Daily (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

052424 SPY Daily

Source: Stockcharts.com

The SPY April downtrend (green line) broke in early May, shifting the short-term trend to up.

SPY closed +0.01% at 529.50, remaining above the 50-day Moving Average (blue rectangle) and the 200-day Moving Average (red rectangle).

Support is at 525.00, 520.00, 515.00, 493.00 and 470.00. Resistance is at 533.00, with an upside potential objective of 550.00.

MACD (middle chart) remains on a buy above 0, falling. SPY has already broken the downtrend from March, and this week, despite no gain, it broke the December 2023 downtrend (red), which is positive.

Money flow (bottom chart) accelerated higher after breaking the February downtrend (green line), peaked above 80 (orange circle), and is now falling.

Two closes above 531.52 would imply the SPY rising towards the 550.00 short-term objective.

Summing Up:

Fewer stocks made new highs, and only a few sectors finished higher last week. The weakening momentum in the Russell 2000 will be concerning if it continues to trend lower. The leadership of Technology and Semiconductor stocks is positive, along with the major averages in price uptrends and support levels holding for the short and intermediate term. It’s early to get bearish. Give the bulls the benefit of the doubt.

Remember to manage your risk, and your wealth will grow.

Let’s talk about investing together. You are invited to schedule your Free 30-minute consultation by emailing me at Bonnie@BonnieGortler.com. I would love to schedule a call and connect with you.

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.  

Bonnie S. Gortler

Bonnie Gortler, a Consultant, Coach, and Author, is a Wealth & Well-Being expert with over 35 years of experience in managing multi-million-dollar client portfolios at a top-rated investment firm. As the author of Journey to Wealth, Bonnie is dedicated to teaching the importance of risk management and achieving true financial well-being by integrating both the technical and mental aspects of investing. With an M.B.A. and certification as a life coach, Bonnie combines her passion for coaching, consulting, and blogging to inspire people globally. Her powerful techniques and winning mindset help others experience personal growth and financial success. Explore wealth-building tips, personal development strategies, and more at BonnieGortler.com, and discover how you can enhance your wealth and well-being.  


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