Market Update Into June 5th: Is A Rotation Coming?

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Another month is in the books, and the indices are showing great resilience, with tech leading the charge. By week’s end, renewed strength had even come into small caps, suggesting the potential for some rotation in the days and weeks ahead. This would allow large-cap growth to cool off from the impressive run it had over the past few months. Let’s dig into the individual names and see where we are!

Weekly Analysis

This week, the SPY ETF closed at $427.92 (+1.88%), ending May with an outside candle and immediately going 2u for June and closing decisively outside of the ascending triangle on the weekly chart. Like the QQQ, however, this index is also printing a sell signal on the RSI w/ Bollinger Band indicator, suggesting it might need to cool some before continuing higher.

This is an image of the monthly and weekly charts of the SPY index.

This week, the QQQ ETF closed at $354.65 (+1.79%), with May’s monthly candle stalling right at the .618 Fibonacci retracement level. Above lies a monthly FVG, around $375, but this index might need to cool a little before attempting those levels. This is suggested in the sell signal on the RSI indicator pictured in the weekly chart. If a pullback comes, the area around the aVWAP from ATH, the aVWAP from the March lows, as well as the March 2022 high could be worth keeping an eye on.

This is an image of the monthly and weekly charts of the QQQ index.

This week, the IWM ETF closed at $182.02 (+3.33%), making it the strongest performer of the bunch. The May monthly candle closed outside and indecisive, but this week ended with a bang, the price closing decisively over the aVWAP from the January highs. If the tech sector does cool in the coming days and weeks, keep an eye out for rotation into small-cap names.

This is an image of the monthly and weekly charts of the IWM index.