Markets Analysis – Week#5 (ending April 5th) Markets Slow, Bitcoin Falling

Last week (week 4) most key markets crept higher with the exception of bitcoin’s sideways movement.

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.

This week the S&P 500 declined to close the trading week under average volume. By the end of the week SPY moved below the support line and also below the 20 day moving average. The trend still remains up overall, however next week will be telling as to whether we are actually in the start of a trend reversal or not.

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 down slightly for the week at the 440 level, trading sideways under relatively flat volume. The Nasdaq 100 is still in an overall uptrend which has been the case since at least April 2023. The uptrend accelerated in Nov 2023, however the last few weeks has seen the Nasdaq 100 run slow. This week the Nasdaq 100 crossed below the 20 day moving average, so we will have to see if this is a pause before it resumes moving higher or reverses completely.

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 declined slightly ending the week in the 5540 range. Similar to the S&P 500 and Nasdaq 100, the financials are entering a slight pause falling below the 20 day moving average.

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 fell slightly this week, falling below the 20 day moving average. The Russell 2000 has not been able to push above the 211 resistance level, but is still in an overall up trend.

Unlike the Nasdaq bull run, the Russell 2000 has traded within a range since April 2022. Key previous resistance points to keep an eye on are around around the 211 and 227 and 242 marks. 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 flat volume. The Canadian stock market touched on the resistance level, but has not yet pushed through the resistance level set back in April 2022. The Canadian market still remains above the 20 day moving average.

Now if we look at a slightly longer time horizon, we can see that the TSX has been trading sideways since April 2022 and if the TSX pushes through the April 2022 resistance level it will have room to run.

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 continued its run up which has been the trend since Nov 2018. More recently gold’s run has gone parabolic, rising well off its support line and well above the 20 day moving average.

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 continued to move slightly higher, and has moved well above the rising wedge formation under average volume. This week USO did not cross the $82 resistance price level, however a cup with handle or cup without handle pattern may be forming and is something to watch out for to be able to ride the momentum up to the $92 price level.

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 declined slightly under continued declining volume after a significant rise starting in Oct 2023. It looks like BTC is losing steam.

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. You can see the falling wedge pattern that formed since the beginning of 2024. The continued downward movement continues to reflect the current high interest rate environment.

Market Outlook