Markets Analysis – Week#2 (ending March 15th) Markets Take a Breather

Last week (week 1) the markets moved higher, this week most market took a slight breather.

SPY – S&P 500

The S&P 500 stock market index tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It includes approximately 80% of the total market capitalization of public companies in the United States.

The S&P took a slight pause by the end of this week, ending around the 500 level on high volume in the 100+ million range. By the end of this week, the support line was just touched so any further downward movement would be considered falling below support.

QQQ – Nasdaq 100

The Nasdaq 100 is a stock market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index, meaning the stocks’ weights in the index are based on their market capitalizations with certain rules capping the influence of the largest components. So price fluctuations in companies like Alphabet, Apple, Tesla, Nvidia directly affect the Nasdaq 100 day to day.

By the end of the week the Nasdaq 100 ended up lower for the week at 433, well below the up trend support line. The Nasdaq was down 4 out of 5 days this week, with the final pullback on Friday occurring under heavy trading volume.

IXF – Nasdaq 100 Financial

The Nasdaq Financial-100 is a stock market index operated by Nasdaq consisting of companies that are listed on the Nasdaq stock exchange, that are in the financial services industry, including banking, insurance, mortgages and securities trading.

This week the Nasdaq Financials breakout reversed ending the week at the 5458 level.

IWM – iShares Russell 2000 ETF

The Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. The index is a widely quoted measure of the overall performance of small-cap to mid-cap company shares. It is commonly considered an indicator of the U.S. economy due to its focus on small-cap companies in the U.S. market.

The Russell 2000 reversed and fell below the support line of the consolidation pattern observed ending the week at the 202 level, close but not below the previous low of 198.This establishes an updated flatter support line for the consolidation pattern that the Russell 2000 is forming.

Unlike the Nasdaq bull run, the Russell 2000 has traded within a range since April 2022, so if it rises above the ~212 mark it may break out towards the next resistance level at 240. It would appear that a lot of the money in the market have been driving the large caps higher over the years leaving the Russell 2000 to underperform.

XIU – iShares S&P/TSX 60 Index ETF

XIU is a liquid ETF that tracks the TSX 60 Index, which consists of the top 60 companies in Canada and has a large-cap focus.

The Canadian market continued its up trend this week under relatively flat volume. The Canadian stock market briefly touched on a new high and then retreated down slightly by the end of the week.

Now if we look at a slightly longer time horizon, we can see that the TSX is nearing the previous resistance level established in April 2022, there is not a lot of room to run if the April 2022 resistance level holds.

GLD – SPDR Gold Shares ETF

GLD is a relatively cost efficient and secure way to access the gold market. SPDR Gold Shares is the largest physically backed gold exchange traded fund in the world.

Gold’s continued parabolic run last week lost steam this week as GLD ended the week at the 199 level.

USO – United States Oil Fund ETF

USO’s investment objective is for the daily changes, in percentage terms, of its shares’ net asset value (NAV) to reflect the daily changes, in percentage terms, of the spot price of light sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in the Benchmark Oil Futures Contract. Specifically, USO seeks for the average daily percentage change in USO’s net asset value, for any period of 30 successive valuation days, to be within plus/minus 10% of the average daily percentage change in the price of the Benchmark Oil Futures Contract over the same period.

This week Oil rose above the top line of the resistance of the consolidation pattern under lower volume. Ideally we see further increases next week under high trading volume to confirm this trend.

GBTC – Grayscale Bitcoin Trust

Bitcoin is a digital asset that is created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols. The Bitcoin Network allows people to exchange tokens of value, Bitcoins, which are recorded on a public transaction ledger known as a Blockchain.

The Grayscale Bitcoin Trust is one of the first securities solely and passively invested in Bitcoin (“BTC”) that enables investors to gain exposure to BTC in the form of a security while avoiding the challenges of buying, storing, and safekeeping BTC, directly.

This week BTC lost steam and pulled back slightly to the 61 level under falling volume on the up days this week.

TLT – iShares 20+ Year Treasury Bond ETF

The iShares 20+ Year Treasury Bond ETF seeks to track the investment results of an index composed of U.S. Treasury bonds with remaining maturities greater than twenty years. The TLT portfolio’s effective duration is 16.5 years. So, if interest rates fall by 1.0%, TLT’s price could rise by 16.5%.

This week TLT continued its overall down trend, which has resumed as of Jan 2024. The continued downward movement continues to reinforce the current sentiment that interest rate cuts have not occurred and that interest rate cuts may not be imminent.

Market Outlook