After the powerful moves we saw last week, it was likely that things might need to cool off a little, with many indicators flashing overbought conditions. Inside candles formed on the weekly charts of two of the three major indices, suggesting buyers are taking a ‘wait and see’ approach before attempting to push higher. The rotation from large caps to small caps still seems in play, and we’ll discuss the individual charts below!
This week, the SPY ETF closed at $433.21 (-1.42%), testing the August 2022 high and the top of the ascending channel on the daily chart. The weekly candle closed inside, and a break above the high or below the low next week could signal the direction of the next move. Below lies the aVWAP from the March 2023 low which could act as support if this index continues lower in the coming weeks.
This week, the QQQ ETF closed at $362.54 (-3.79%), finding resistance at the March 2022 high and falling back into the ascending channel on the daily chart. Like the SPY, the weekly candle closed inside, which provides traders with actionable signals for next week on a break above or below the high/low of this week.
This week, the IWM ETF closed at $180.57 (-2.89%), falling back into the previous resistance level on decreasing volume and testing the aVWAP from the February 2023 high. If this area holds, traders might look for a retest of the aVWAP from the all-time high and bulls will likely be keeping a close eye on the bottom of the descending triangle as a key level of support.