Swing Trading Markets Analysis: Nasdaq 100 and Gold Strength #wk18

Swing Trading Market Summary Shows Nasdaq 100 and Gold Strength

Here is the swing trading markets analysis for this week #18 ending July 5th 2024 which saw Nasdaq 100 and Gold Strength with increases of 2.87% and 2.46% respectively.

Last week’s swing trading markets analysis saw the Russell 2000, S&P/TSX and Oil rise. Bitcoin, Gold and the 20 Year Treasury pulled back to close the trading week.

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 rose by 1.36% to close the week, following a decline of 0.02% last week. By the end of the week, the S&P 500 remained above the 10-day (exponential), 21-day (exponential) and 50-day moving averages.

Next week: I expect the S&P 500 to trade higher following 3 days of strong moves higher by the end of this trading week, despite average trading volume. Next week it will be interesting to see if higher trading volume drives the S&P 500 higher.

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 moved higher by 2.87% following a rise of 0.19% last week and 0.78% the week prior. The Nasdaq 100 has been rising the last four weeks under average volume. The Nasdaq 100 remains well above both the 10-day (exponential), 21-day (exponential) and 50-day moving averages, following four straight weeks of increases.

Next week: I expect the Nasdaq 100 to continue to move higher because of the strong move up to close the week. The Nasdaq 100 is trending above the overall uptrend similar to the way it was Nov 2003 to April 2024. As of last week the Nasdaq 100 is further from the overall trendline compared to the period during Nov 2003 to April 2024 – a pullback may be coming. Nasdaq 100 and Gold strength are themes of this week’s swing trading market analysis.

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 fell by 0.28% compared with a rise by 1.45% last week. The Nasdaq Financials closed the week BELOW the 10-day (exponential) and 21-day (exponential), and remained below the 50-day moving average.

Next week: I expect the financials to trade sideways or decline because of the weak close this week.

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 by 1.43% compared with rising by 1.10% last week. The Russell 2000 closed BELOW the 10-day (exponential), 21-day (exponential) and 50-day moving averages at the end of the week. The Russell 2000 remains in a long term (although shallower) uptrend.

Next week: I expect the Russell 2000 to trade slightly sideways or slightly lower because of a weak close at the end of the week.

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 stock market rose by 0.33% following a rise of 2.00% last week. The Canadian stock market closed above the 10-day (exponential), 21-day (exponential) and 50-day moving averages.

Next week: I expect the Canadian market to trade slightly higher because of the back-to-back higher closes the last two weeks, however the magnitude of incremental increase decreased this week compared to last week. The Canadian market is also bumping up against a long term resistance level.

Looking at a slightly longer time horizon, we can see that the TSX has been trading sideways since April 2022 and only recently has broken through the high / resistance level. Unfortunately the Canadian market could not remain above the $33.91 resistance level, but is still trading at the high 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 rose by 2.46% this week following back-to-back decreases of 0.35% and 0.26% the week prior. Gold has been in an overall up trend since Nov 2018. More recently gold’s run has seen a pullback to its long term trendline and break through support. Gold has been trading sideways, and this week closed ABOVE the 10-day (exponential) 21-day (exponential) and 50-day moving averages.

Next week: I expect gold to continue to trade higher because it broke through resistance and had a strong gap up close to this week. Nasdaq 100 and Gold strength are themes of this week’s swing trading market analysis.

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.

Looking at the longer term view, Oil is trading in a range and has formed higher lows since mid 2023.

This week oil rose by 1.62% compared with back-to-back week increases of 1.36% and 2.65% the week prior. Oil remains above its 10-day (exponential), 21-day (exponential), 50-day and 200-day moving averages.

Next week: I expect Oil to rise because it is now in an upward trend with both 10-day and 21-day exponential moving averages increasing and recently crossed the 50-day moving average. USO may hit a ceiling of $83.41, or may break through the $83.41 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.

Bitcoin is in a long term uptrend which became extended during the March to April 2024 period however has since reverted back to the overall trendline, and fallen through support.

This week BTC fell by 8.06% compared with falling over back-to-back weeks by 2.06% and 4.63%, marking five weeks in a row of declines. BTC remains WELL BELOW the 10-day (exponential), 21-day (exponential) and 50-day moving averages.

Next week: I expect Bitcoin to trade lower because last week it closed below the long term support level. GBTC may find support at the $45 level.

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 declined by 1.24% compared with falling back-to-back weeks by 2.41% and 0.50%. U.S. central bankers communicated they believe they will cut interest rates just once this year, two fewer than they thought in March as inflation approaches their 2% goal more slowly than they had expected. Additionally, by the end of 2025 policymakers anticipate a policy rate of 4.1%, according to the median of their projections implying an additional four quarter-of-a-percentage-point cuts next year.

Next week: I expect TLT to trade sideways or increase slightly because a weaker jobs report in the U.S. contributing to justification for a potential rate cut soon.

Nasdaq 100 and Gold Strength in the Swing Trading Market Summary