Market Update 6/9/23

The uptrend continues. Nine of the eleven S&P SPDR sectors finished higher for the week. Consumer Discretionary (XLY) and Utilities (XLU) were the best sectors, while Technology (XLK) and Consumer Staples were lower (XLP), with the SPDR S&P 500 ETF Trust (SPY) up +0.46%.

 S&P SPDR Sector ETFs Performance Summary 6/02/23-6/9/23

060923 SPDR Sectors

Source: Stockcharts.com

Figure 2: Bonnie’s ETFs Watch List Performance Summary 6/02/23-6/9/23

060923 Week ETFs

Source: Stockcharts.com

China made a low on 5/31/23 and reversed higher. Small Cap Value and Growth continued higher for the second week. Technology and Semiconductors slowed their pace of gains while Biotechnology and Europe lagged.

Figure 3: CBOE Volatility Index VIX

060923 VIX Daily

Source: Stockcharts.com

The CBOE Volatility Index (VIX), a measure of fear, traded above 20.00 for most of 2022, with a high at 36.95 on 3/7 (blue circle). A new VIX low did not occur until 1/13/23 at 18.35 (green circle).

Volatility Index (VIX) has been trending down since March. VIX penetrated the November 2021 low last week closing at 13.83 (purple circle), its lowest close since January 2020.

Intraday volatility will likely remain low over the next several weeks unless VIX closes above 20.00, look for volatility to increase towards 24.00 and potentially higher.

Figure 4: UST 10YR Bond Yields Daily

060923 UST 10 Yr Bond Yields Daily

Source: Stockcharts.com

The 10-Year U.S. Treasury yields rose last week, closing at 3.745%. Support remains at 3.20%, with resistance at 4.00%. Yields rising above 4.00% would likely put pressure on equities.

The major market averages were all higher last week. The Dow rose +0.34%, the S&P 500 up +0.39%, a four-week winning streak, and the Nasdaq gained +0.14%, its 7th positive week. The Russell 2000 Index rose +1.90%, adding to its previous week’s gains of +3.26%.

Figure 5: Value Line Arithmetic Average

060923 VLE Daily

Source: Stockcharts.com

The Value Line Arithmetic Index ($VLE) is a mix of approximately 1700 stocks. VLE broke the October 2022 uptrend in early March, headed lower, and on 3/24, bottomed and reversed higher. In April and May, there were successful tests of the low.

VLE gained +1.35%, outperforming the primary average last week, but stalled under resistance at 9200 but finished above the May highs (green circle), the 50-Day MA (blue rectangle), and the 200-Day MA implying strength.

Key resistance remains at 9200, and support is at 8800, 8700, and 8600.

Two closes above 9200 would confirm further gains toward 9400 and 9700.

Let’s talk investing. You are invited to set up your Free 30-minute Wealth and Well-Being Strategy session by clicking here or emailing me at Bonnie@BonnieGortler.com. I would love to schedule a call and connect with you.

Market breadth improved last week, but no breadth thrust

Weekly market breadth was positive on the New York Stock Exchange Index (NYSE) and for the Nasdaq. The NYSE had 2055 advances and 1066 declines, with 234 new highs and 62 new lows. There were 2802 advances and 2102 declines on the Nasdaq, with 360 new highs and 234 new lows.

For the advance to accelerate higher and broaden to other sectors, you want to see continued expansion in the weekly number of New Highs and the number of weekly New Lows to contract.

 Figure 6: NYSE Cumulative Advance-Decline Line and New York Stock Exchange Index (Below)

060923 Daily NYSE Cumulative Advance-Decline Line and NYSE

Source: Stockcharts.com

The top chart is the Cumulative Advance-Decline Line (AD Line) of the NYSE, a breadth indicator based on the number of advancing stocks minus the number of declining stocks.  The NYSE AD Line peaked in February 2023 (green circle top chart) and then declined as the S&P 500 and Nasdaq rose.

The uptrend in the NYSE Advance-Decline Line from October (top chart) had a false breakdown (red circle) with no downside follow-through.

There was an immediate improvement in breadth last week, enough for the downtrend in the AD-Line from February (green line) to break still below the February highs (pink circle).

The New York Index (lower chart) would confirm the AD line if it breaks the downtrend (green line). Time will tell if the market has enough strength or if the latest rally will fail.

Nasdaq breadth remains below resistance.

Figure 7: Nasdaq Advance Decline Line Daily (Top) and Nasdaq (Bottom)

060923 Daily Nasdaq Cumulative Advance-Decline Line

Source: Stockcharts.com

The chart is the Nasdaq Daily Advance-Decline Line, a technical indicator that plots the difference between the number of advancing and declining stocks.

In January, the October 2022 downtrend was broken (solid green line). However, the improvement in the market breadth was short-lived, with the Nasdaq Advance-Decline line deteriorating in February 2023.

The August downtrend (green dotted line top chart) remains in effect as Nasdaq continues to new 52-week highs (lower chart). It will be favorable if there is strong market breadth this week where the AD-Line gets through resistance (brown dotted line and then breaks the August downtrend (green dotted line) to confirm more stocks will participate in the advance.

Learn more about charting in my Free 33-minute Training, Charting Strategies to Cut Risk and Trade with the Trend. Sign up here

 Figure 8: Daily New York Stock Exchange (NYSE) New Lows

060923 NYSE New Lows Daily

Source: Stockcharts.com

Watching New Lows on the New York Stock Exchange is a simple technical tool that helps awareness of the immediate trend’s direction.

New lows warned of a potential sharp pullback, high volatility, and “panic selling” for most of 2022, closing above 150. The peak reading was 9/23/22 when New Lows made a new high of 1106 (pink circle), and New Lows expanded to their highest level in 2023 on 3/13/23 (red circle) to 335.

It’s positive New Lows closed at 15 (purple circle), remaining in the lowest-risk zone below 25, for the second week.

Learn more about the significance of New Lows in my book, Journey to Wealth, published on Amazon.  If you would like a preview, get a free chapter here.

Figure 9: Daily New York Stock Exchange (NYSE) New Highs

060923 NYSE New Highs Daily

Source: Stockcharts.com

New highs have been rising in June. However, they did not get above the February high of 203. For the rally to be sustainable, I want to see an increase of New Highs to more than 203 made on 2/2 and continue to expand and New Lows (Figure 8) to stay in the lowest risk zone below 25.

On the other hand, two closes above 150 New Lows would imply an increased risk of a decline forthcoming.

Small Caps are acting better.

Figure 10: Daily iShares Russell 2000 (IWM) Price (Top) and 12-26-9 MACD (Middle and Money Flow (Bottom)

060923 IWM Daily

Source: Stockcharts.com

The top chart is the daily iShares Russell 2000 Index ETF (IWM), the benchmark for small-cap stocks, with a 50-Day Moving Average (MA) (blue line) and 200-Day Moving Average (MA) (red line) that traders watch and use to define trends.

IWM outperformed the major averages last week for the second week, up +1.94%, closing at 185.03, closing above the resistance of 180.00, and now support. IWM remains above the 200-Day MA (red rectangle) and the 50-Day MA (blue rectangle), implying underlying strength.

Resistance remains at 188.00, where IWM broke down in March, and support is at 180.00, 175.00, and 172.00.

MACD (middle chart) is on a buy, above 0, rising, and higher than late May, which is positive. Weekly MACD (chart not shown) is also on a buy, rising but not enough momentum to get above 0.

Money Flow (lower chart) is falling, holding support above 50. An immediate turn-up would be positive.

IWM has acted much better in the last few weeks and is likely to attract more buying if IWM can close above resistance at 188.00 with MACD and Money Flow rising.

Nasdaq continues higher  

Figure 11: Nasdaq Composite

060923 Nasdaq Composite Daily

Source: Stockcharts.com

After Nasdaq penetrated resistance of 12300 in May, it continued higher in an uptrend, making higher highs and higher lows during its seven-week winning streak.

Nasdaq closed at 13259.77, up +0.14% last week.

The upside channel objective is 13850, with support at 12250.

Overhead Resistance Remains

Figure 12: Dow Jones Industrial Average

060923 Dow Jones Industrial Daily

Source: Stockcharts.com

The Dow Jones Industrial Average trended higher, gaining +0.34%, closing at 33876.78, remaining below resistance at 34250. A close above 34250 for two days could fuel further gains in Dow stocks as investors rotate out of strong performers in 2023 into Dow stocks that have underperformed.

Figure 13: Daily Vaneck Vectors Semiconductors (SMH) Price (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

060923 SMH Daily

Source: Stockcharts.com

The top chart shows the Daily Semiconductors (SMH) ETF, concentrated mainly in   US-based Mega-Cap Semiconductors companies. SMH tends to be a lead indicator for the market when investors are willing to take on increased risk and the opposite when the market is falling.

Semiconductors (SMH) rose by +0.48 % after a small loss last week, consolidating after gaining almost 20% in three weeks leading the market higher.

MACD (middle chart) confirmed the new high but momentum has started to flatten and could give a sell on any weakness in SMH.

Money Flow (lower chart) remains in an uptrend (pink line) but is no longer rising and is close to breaking its uptrend.

The daily channel upside objective remains 155.00, with support at 140.00, 135.00, and 125.00.

Do you like charts, I invite you to join my FB group Wealth Through Market Charts.

Figure 14: Daily Invesco QQQ Trust (QQQ) Price (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

060923 QQQ Daily

Source: Stockcharts.com

The chart shows the daily Invesco QQQ, an exchange-traded fund based on the Nasdaq 100 Index. QQQ made a low in October 2022 (red circle), followed by a successful retest of the low in early January 2023 and the start of a strong uptrend which remains in effect.

QQQ fell -0.04% last week, closing at 354.50, breaking the steep May uptrend (blue line). However, its positive QQQ remains above the rising 50-Day Moving Average and the 200-Day Moving Average (red rectangle) and above the old August 2022 high (purple circle).

Support remains at 345.00, 340.00, 335.00, and 320.00.

The bottom chart is MACD (12, 26, 9), a measure of momentum remains on a sell because MACD didn’t reset, falling below 0. However, it’s favorable that MACD broke the February downtrend (green line) and made a higher high confirming the price high.

The intermediate trend of QQQ remains up (chart now shown), with a pattern of higher highs and higher lows, with an objective of 360.00 and potentially 370.00. (see the Market Update 06/02/23 for further analysis.

In Sum,

The short and intermediate trend remains up.

Figure 15: The S&P 500 Index (SPY) Daily (Top) and 12-26-9 MACD (Bottom)

060923 SPY Daily

Source: Stockcharts.com

The S&P 500 (SPY) has been in an uptrend since October 2022.

SPY rise 0.46% for the fourth consecutive week of gains, closing near its upper range for the week above resistance at 425.00, acting as first support.

SPY closed above the 50-Day Moving Average (blue rectangle) and the 200-Day Moving Average (red rectangle), a sign of underlying strength.

MACD (bottom chart) remains on a sell as it never went below 0 to generate a new buy, a sign of internal strength. It’s positive that SPY broke the momentum downtrend (green trend line) last week from August 2022, implying more room for the upside.

Resistance is at 440.00. Support is at 425.00, 415.00, 405.00, and 395.00

The bulls remain in control.

Strength in Small, Mid, and Micro Caps is positive.

Figure 16: Daily SPDR S&P 500 ETF Trust (SPY), (Top) and below SPDR S&P MidCap 400 (MDY), iShares Core S&P Small-Cap (IJR), and iShares Micro-Cap (IWC) ETF

060923 SPY MDY, IJR, and IWC ETF Daily

Source: Stockcharts.com

The above chart is The SPDR S&P 500 ETF Trust (SPY), SPDR S&P MidCap 400 ETF (MDY), iShares Core S&P Small-Cap (IJR), and iShares Micro-Cap (IWC). All four ETFs broke the longer-term downtrends earlier this year (green lines), but there was no significant follow-through other than the S&P 500 (SPY).

However, Small and Mid-Cap stocks have joined the rally in the past two weeks, outperforming the S&P 500 (SPY).  All ETFs closed above their downtrends (blue line and circle) and above their May highs.

MDY gained +1.43% last week, IWC was up 2.54%, and IJR was up 1.70%, adding to their over +3.00% gains the previous week.

Further gains in MDY, IJR, and IWC stronger than the SPY would imply more stocks participating in the advance.

Summing Up:

There were slight gains in the major averages last week as the Nasdaq and S&P 500 made a new 52-week high. Upside momentum slowed in Technology and Semiconductors, but they remain in an uptrend. Investors are showing interest in Smallcap, Microcap, and Mid Cap stocks before the completion of the annual rebalancing in the Russell 2000 indexes on June 26th. Next week, some intraday volatility may occur ahead of the Fed meeting and the Consumer Price Index (CPI) data released next week. The tape remains bullish, with higher upside objectives, but consolidating the recent gains is possible before a rally into the end of the quarter.

Remember to manage your risk, and your wealth will grow.

Let’s talk investing. You are invited to set up your Free 30-minute Wealth and Well-Being Strategy session by clicking here or emailing me at Bonnie@BonnieGortler.com. I would love to schedule a call and connect with you.

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

Bonnie S. Gortler

Bonnie Gortler, Consultant, Coach, and Author specializing in Wealth and Well-Being, is a successful stock market expert who has been instrumental in managing multi-million-dollar client portfolios within a top-rated investment firm during her over 35-year corporate career. As the author of “Journey to Wealth,” Bonnie has made it her mission to share the importance of risk management and how to enjoy real financial well-being by applying the technical and mental sides of investing. Bonnie has an M.B.A. and is a certified life coach. It is through her love of coaching, consulting, blogging, and social media that she creates change in the lives of many and inspires people from around the world. Bonnie is fully committed to your personal growth and development as she shares her winning spirit and powerful techniques with you. Visit BonnieGortler.com to gain tips and insights about investing, personal development, and inspiration through her articles on Wealth and Well-Being.
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