Swing Trading Markets Analysis: IWM Breakout on Lower U.S. Inflation Report #wk19

Swing Trading Market Summary Shows IWM Breakout and Strength in Nasdaq Financial and Canadian S&P/TSX

Here is the swing trading markets analysis for this week #19 ending July 12th 2024 which saw Nasdaq Financials, Russell 2000 and Canadian market move higher. IWM Breakout appeared as a result of a lower United States inflation report.

Last week’s swing trading markets analysis saw the Nasdaq 100 and Gold Strength with increases of 2.87% and 2.46% respectively.

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 0.82% following a 1.36% rise 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 edge up slightly / trade sideways because of the small increase this week and Friday’s close in the mid of the daily trading range.

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 fell by 0.34% compared with a rise of 2.87% last week. The Nasdaq 100 remains above the 10-day (exponential) and well above the 21-day (exponential) and 50-day moving averages, following multiple straight weeks of increases prior to this week.

Next week: I expect the Nasdaq 100 to continue to edge higher or trade sideways because of the higher close this week, however the lower close within the daily trading range on Friday suggests some weakness may appear.

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 rose by 3.14% compared with felling by 0.28% last week. The Nasdaq Financials closed the week above the 10-day (exponential) and 21-day (exponential), and 50-day moving averages.

Next week: I expect the financials to trade higher given the strong move up this week, coupled with high likelihood of 1-2 interest rate cuts before year end.

IWM Breakout – 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 by 5.26% compared with falling by 1.43% last week. The Russell 2000 closed well above 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 edge higher because of the low close on Friday at the bottom of the daily trading range.

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 has broken above the $211 level at the end of this week, although had a weak higher close on Friday to end the week.

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 2.67% following a rise of 0.33% last week. The Canadian stock market closed well above the 10-day (exponential), 21-day (exponential) and 50-day moving averages.

Next week: I expect the Canadian market to trade higher because of the back-to-back higher closes the last three weeks and the Canadian market break above the $33.91 resistance level.

Looking at a slightly longer time horizon, we can see that the TSX has been trading sideways since April 2022 and has broken through the high / resistance level at $33.91, moving higher on Thursday and remaining higher on Friday to close the week.

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 1.58% this week compared to rising 2.46% 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 remained above the 10-day (exponential) 21-day (exponential) and 50-day moving averages.

Next week: I expect gold to continue to trade higher because of the strong close this week, however may find resistance at the $225 level back from early May.

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 fell by 0.40% compared with rising by 1.62% the week prior. Oil fell below its 10-day (exponential) moving average however remains above its 21-day (exponential), 50-day and 200-day moving averages.

Next week: I expect oil to fall as it closed below its 10-day exponential moving average. Assuming Oil continues to fall it will be interesting to see if it holds at the 21-day exponential.

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 rose by 0.71% compared with falling by 8.06% last week. BTC remains WELL BELOW the 10-day (exponential), 21-day (exponential) and 50-day moving averages.

Next week: I expect Bitcoin to trade sideways because of the close at the bottom of the daily trading range on Friday. BTC has seemed to find support around the $51 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 rose by 1.49% compared with declining by 1.24% last week. This week’s U.S. lower inflation report suggests that interest cuts will materialize before the end of this year.

Next week: I expect TLT to trade sideways.

Nasdaq 100 and Gold Strength in the Swing Trading Market Summary