Swing Trading Markets Analysis – Week#9 (ending May 3rd) Markets Show Signs of Life

Swing Trading Market Summary

Here is the swing trading markets analysis for this week ending May 3rd 2024. Most of the markets showed signs of life heading into next week, however Bitcoin, Gold and Oil will probably continue their decline next week. Last week (week 8) most key markets traded sideways, following a reversal after a significant run up.

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 climbed by 0.22% to close the trading week under average volume. SPY has moved above the 20-day (ema) moving average and sits just below the 50-day moving average. The S&P 500 gapped up on Friday but did not make a further move up on Friday, making for what will be an interesting week next week. The S&P 500 is now making higher lows, and it will be interesting to see if the S&P 500 can continue moving higher following the gap up on Friday.

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 by 0.51%. The Nasdaq 100 remains below the 20-day (ema) and 50-day moving averages trading sideways but not declining to the 200-day moving average. Similar to the S&P 500, the Nasdaq 100 gapped up on Friday to close the week just in slightly positive territory for the week. A trend of higher lows is forming so hopefully that will continue next week.

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 climbed by 0.65% to end the week, essentially remaining flat. This week the financials still ended the week above the 20-day (ema) and 50-day moving averages.

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 rose 1.34% this week (continuing to trend upwards from last week), but remained below the 50-day moving average. The Russell 2000 ended Friday slightly higher and moved well above the 20-day (ema) moving average to close the week. The Russell 2000 posted higher gains this week than the S&P 500 or Nasdaq 100.

Unlike the Nasdaq bullish 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 has been driving the large caps higher over the years leaving the Russell 2000 to underperform. In the bigger picture the Russell 2000 remains within the trading range established back in April 2022, however the Russell 2000 is trading at the high end of the range.

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 declined 0.06 this week under average trading volume. The Canadian stock market currently sits just above the 20-day (ema) and 50-day moving averages to close the week. Similar to the US market the Canadian market is starting to form higher lows, following a pullback from a 5 month upward trend.

Looking at a slightly longer time horizon, we can see that the TSX has been trading sideways since April 2022 and continues to trade within but at the top end of the range.

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 started to decline this week, moving downward slightly by 1.42%. Gold has been in an overall up trend since Nov 2018. More recently gold’s run has seen a slight pull back from its strong run. Gold moved down this week below its 20-day (ema) moving average, however remains above the 50-day and 200-day moving averages. Gold could fall back to the 50-day moving average before moving higher, or could fall back close to the 200-day moving average which is more in line with its previous flatter trend upward.

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 fell by 6.16%, now sitting below its 20-day (ema) and 50-day moving averages. USO is approaching its 200-day moving average where it may find support. The possible support level close to the 200-day moving average is more inline with USO’s trend established December 2023 to February 2024.

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 by 0.52%, after falling 6.3% the week prior. BTC is continuing its reversal pattern remaining below the 20-day and 50-day moving averages at the end of last week. BTC is making lower lows, which suggests that more downward movement is possible. BTC may fall close to the support line established from the October 2023 uptrend before moving back higher.

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 moved higher by 1.33%, breaking the steeper downtrend that started in April 2024. This week the Federal Reserve announced it would keep interest rates at a 23-year high after its May gathering, but also announced plans to shrink its massive $7.4 trillion balance sheet at a slower pace. This matters because the Fed’s balance sheet ultimately impacts the money supply and availability of credit in the economy. The Fed is hoping to avoid the risk of shrinking the money supply too much, which could cause market volatility and make their inflation fight more difficult. Although there were no rate cuts with this announcement the Fed is working to avoid surprising the market and positioning towards a rate cut later in the year.

Swing Trading Market Outlook