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The focus of this newsletter is to show my updated TA for the 4 major ETFs, so do read the initial market outlook post (#TBI2025[8]) for context before referring to this post.
Without further ado, here’s today’s analysis:
SPDR Dow Jones Industry Average ETF (NYSEARCA: DIA)
In my previous newsletter, I talked about a potential lower high forming at either the 426.06-431.02 or 438.82-441.07 weekly bearish imbalances. DIA rejected off the 426.06 resistance after attempting to fill the imbalance, and immediately ranged back into the 416.44 quarterly support, closing just below it.
The SKDJ indicator continues to expand to the downside, and is in neutral territory. If 416.44 cannot be reclaimed, then the probability of further downside towards the 406-408 area increases, with the weekly bullish imbalance at 396.49-406.02 in play below that.
Note that DIA is still not at its support trendline (in blue), so it could continue to push into this trend before reversing its short-term downtrend.
Invesco QQQ Trust, Series 1 (NASDAQ: QQQ)
In my previous newsletter, I talked about a potential retest of 465.74 or a dead cat bounce to 501.35, which is prior support. Neither scenario has materialised, and QQQ has effectively been rangebound for the past 3 weeks. It rejected off the weekly resistance at 483.97 and has been unable to fill the weekly bearish imbalance at 483.97-496.93, suggesting continued weakness.
The SKDJ indicator continues to expand to the downside, and is in neutral territory. This increases the likelihood of 465.74 being retested, with a breakdown below that level likely resulting in a significant move down into the next support at 455.63.
QQQ is far from its support trendline, and could continue correcting to the downside until it reaches its long-term trend.
SPDR S&P 500 ETF Trust (ARCA: SPY)
In my previous newsletter, I talked about a move lower into 545 which would align with a retest of the short-term support trendline (in green). Recently, SPY entered a short-term snapback rally in the form of a bearish ascending channel, but it broke down from the ascending channel during Friday’s trading session.
The most likely scenario is for SPY to retest quarterly support at 550.28 and the support trendline, which could result in a double bottom setup. However, if both 550.28 and the support trendline are lost, then SPY could push further into 544.96, and subsequently fill the weekly bullish imbalance at 534.51. A structural breakdown will most likely result in further downside over the next few weeks and months.
The SKDJ indicator continues to expand to the downside on the weekly chart, suggesting more trouble ahead should the short-term trend be lost. Ultimately, SPY could head back into its long-term trendline (in blue).
iShares Russell 2000 ETF (NYSEARCA: IWM)
In my previous newsletter, I talked about the 196.16 support level and how that could act as potential support for another snapback rally. Until now, IWM has still not retested that level. Below this level, it opens up significant downside into the monthly bullish imbalance at at 181.76-187.53.
It had a short-term snapback rally, trading in an ascending channel pattern that broke down after Friday’s trading session, in similar fashion to SPY, before closing just above the 200.04 support level. The daily SKDJ indicator is nearing a bearish crossover, suggesting further downside could be imminent.
I’m continuing to watch the bearish SKDJ crossover and RSI trend on the monthly, and we should get greater clarity on the direction of this market in the next few weeks, after March’s monthly candle close.
Summary
In my previous Market Outlook newsletter, I shared about the bearish SKDJ crossovers and RSI bearish divergences on the higher timeframes, which have started to play out. The broader market’s inability to produce a significant snapback rally, despite Magnificent 7 stocks being heavily discounted and the Fear and Greed index continuing to remain in Fear and Extreme Fear territory, is suggestive of longer-term weakness.
In bull markets, support trendlines tend to hold, with stocks making higher highs and higher lows. In any other market, trend will frustrate, or even break down. It probably pays to be nimble and to watch for any “cracks” in the surface. Long-term trend breakdowns tend to front run bearish narratives, which in turn accelerate moves to the downside.
In 2025, capital preservation might be the main theme, given the parabolic run ups we have seen since 2008. My tune remains the same from my last Market Outlook newsletter.
$SPDR S&P 500 ETF Trust(SPY)$ $Invesco QQQ(QQQ)$ $SPDR Dow Jones Industrial Average ETF Trust(DIA)$ $iShares Russell 2000 ETF(IWM)$ $SPDR Gold Shares(GLD)$ $GameStop(GME)$
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