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Are you wondering why the Nasdaq 100 is showing strength, while small and mid-cap stocks are struggling? If so, keep reading this post!
In our previous post, we showed you the importance of the 200-day moving averages in the current market. Those long-term support and resistance levels remain crucial to monitor, but let’s zoom in for a closer, updated look at the latest developments since then.
In this article, we’ll dive into the current market split and analyze key technical indicators for ETFs such as $QQQ, $SPY, $IWM, and $MDY. With a few simple chart walk-throughs, you’ll have a clear understanding of the market-moving support and resistance levels you simply can’t afford to ignore.
$QQQ – Nasdaq 100 ETF Breaks Out of Basing Pattern
The Nasdaq 100 ETF ($QQQ) has been showing relative strength lately, leading the market higher and breaking out from a basing pattern. However, don’t let the recent rally fool you—the Nasdaq 100 index is heavily weighted in a few names (such as $AAPL, $MSFT, $NVDA), which are doing most of the work. Ideally, leadership should expand during a market rally, but that’s not happening yet.
Despite the narrow leadership, $QQQ is above the base high and has a shot at testing its major swing high from last summer. The price is currently above the rising 10 and 40-week moving averages, which is a positive sign for the index:
$SPY: S&P 500 ETF Needs to Punch Through Resistance
The S&P 500 ETF ($SPY) is still struggling to gain momentum, and needs to punch through resistance before it can make any significant progress to the upside.
Although the price isn’t too far off the 2022 summer high, it needs to clear resistance of its downtrend line and prior high before it can make any meaningful gains:
$IWM and $MDY – Small and Midcap ETFs Struggle
Russell 2000 small-cap ETF ($IWM) and S&P Midcap 400 ETF ($MDY) were on a roll earlier this year, trading above their rising 10 and 40-week moving averages. However, that’s no longer the case.
Both ETFs were hit hard by last month’s sudden collapse of Silicon Valley Bank and have yet to recover. As such, $IWM and $MDY are now the only major index ETFs still trading below their 200-day moving averages.
$IWM is in bounce mode, but will eventually have to clear a declining 10-week MA and downtrend line to make any progress to the upside:
$MDY is looking like a bear flag, with resistance from the 40-week moving average:
Limitations to the Upside
Our exclusive swing trading report, The Wagner Daily, has been using a rule-based market timing model since 2002. This powerful tool helps us navigate the markets by keeping us on the sidelines and our accounts safe during weak markets, while prompting us to step on the gas pedal when market conditions are bullish. This model helps members avoid the common pitfalls of emotional trading and stay disciplined in their trading approach.
Our market timing model is currently on a Buy signal, but the split market may limit progress to the upside until the technicals of the aforementioned ETFs improve. As such, it’s wise to maintain tight risk management and reduced position size until we start seeing more bullish confirmation across the board. As always, be sure to always use protective stops as well.
Conclusion: Use Technical Analysis to Stay Ahead
In this market update, we’ve explored the split market conditions and analyzed key technical indicators for ETFs such as $QQQ, $SPY, $IWM, and $MDY. While the Nasdaq 100 has broken out from a basing pattern, small and midcap ETFs are struggling.
By using technical analysis, we can identify trends and patterns in the market, which can help us make informed trading decisions. The simple, proven trading strategy of our exclusive swing trade alerts service has helped more than 70,000 traders since 2002.
Don’t let the split market conditions discourage you – with the right tools and resources, you can trade with confidence and achieve success. If you’re ready to take your trading to the next level, sign up for The Wagner Daily report and start your journey towards trading success today! Whether you’re a seasoned trader or a beginner, we can help you stay ahead of the curve and achieve your trading goals.
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