Bottom Line:

The remarkable bid in the NDX, and to a slightly lesser degree also in the SPX remains. The DOW and RUT are considerably weaker. The DOW actually made a slight new low on Friday while the NDX closed deeply higher into Thursday’s wide range down day. The SPX also retraced deeply into Thursday’s range. The RUT experienced the sharpest decline from its recent pivot high into Thursday’s low (3.48%), but also traded deeply into Thursday’s down day range.

Friday was a very low volume day ahead of a three-day long weekend with US markets being closed Monday for Memorial Day. Some “digestion” was not a surprise but the depth of the retracement rallies into Thursday’s down range gives a bit of pause to any bearish implications of the recent drop. A number of scenarios are in play but I don’t have a level of high confidence in any single one as of Friday’s close. 

All we can do is wait for Tuesday’s trade. Believe it or not, admitting you simply don’t know what’s going on can be extremely helpful. Things always clear up. Trade what you know, not what you don’t.

PDF: Weekend Report_2024_05_28

VIDEO: https://youtu.be/ydNh-7Uvp8Y

SPX

Upper KRA: 5342
Lower KRA: 5257

NDX

Upper KRA: 18907
Lower KRA: 18555

DOW

Upper KRA: 40084
Lower KRA: 39020

RUT

Upper KRA: 2113
Lower KRA: 2040 

New York Composite

Upper KRA: 18422
Lower KRA: 18005

SPX Profile 

From last weekend’s Report

Market Profile is a graphing format that gives a unique perspective of price behavior. It highlights trade activity on the horizontal scale of the chart. In doing so, it provides a visual display of the Auction Market Process. The Auction Market Process of Development is a three-step process of price behavior that occurs in all degrees of time – 1) Trend; 2) Stop ; 3) Develop.

The current pattern of the May auction is best described as

“Funky”; it is relatively wide-ranged (with almost two more weeks to go in the May auction) and lacks development. “Development” will occur, but at the moment there are several potential paths. So, there is nothing particularly helpful from this perspective at the moment.

Updated SPX Monthly Profile

The profile of the May auction in the SPX is clearly top heavy at the moment, but we began to see a rotational aspect last week that was inevitable.

Daily Profiles (Auctions)

The SPX has gone net nowhere for the past eight trading days, with a net change of -3.45 points. Day-to-day VALUE is trendless.

Internals

There is nothing particularly helpful from this perspective right now. The 10-day MA of NYSE advancing issues hit its highest level since last January on May 15. This may have marked a peak in intermediate term momentum. Price can go higher for a lot longer. 

VIX

VIX spiked briefly on Thursday but quickly crashed on Friday, once again flirting with yearly lows. This suggests bullish trade and narrower ranges (see chart in last weekend’s update).

US 10-yr Notes

Notes are in a long-term downtrend – choppy but clearly making lower lows and highs.

US Dollar

The Dollar is mired in a range. 

Gold 

Gold made a double top last Monday. A test of 2283.40 looks likely.

Crude

Crude is trading in a downside KRA. Expect a sharp move away from this area soon. The current trend is down.