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SPY/RSP
SPY is currently below its 50-day moving average, reflecting weakness largely driven by the underperformance of the Magnificent Seven and tech/growth stocks, which is dragging the index down despite appearances. However, this doesn’t tell the full story, as RSP (the equal-weight S&P 500 ETF) is at all-time highs, meaning broader market participation is strong and the underlying market (when viewed equally across stocks) is actually performing well and above its moving averages. If you’re positioned in the right stocks or sectors outside of heavy tech influence, conditions are favorable, but the cap-weighted SPY masks this rotation and strength in non-mega-cap areas.
QQQ/QQEW
The Nasdaq (represented by QQQ) has formed what appears to be a double top pattern and is showing significant weakness, trading below its key moving averages in what the speaker describes as a bear market in tech. This makes it a poor environment for tech or growth stocks, with the chart looking “horrible” and no bounce forthcoming unless relief arrives soon (potentially by Tuesday). The speaker warns that without a rebound, tech could face a rough period ahead, and the overall picture points to avoidance of this area right now.
IWM/MDY
Small-caps (IWM) and mid-caps (MDY) are looking solid, with IWM holding up well in a sideways pattern with nothing concerning, and MDY near all-time highs while trending sideways or up. The speaker notes that many of the stocks they’re buying are in the mid-cap space (MDY-related), which is “killing it” for trading opportunities compared to other areas. These indices represent where strength and relative performance currently lie, making mid-caps a preferred area to focus on in the current selective market environment.
VIX
The VIX is painting a “very scary” picture, having risen sharply from the 13 level since January and showing elevated volatility that could lead to further downside if not stabilized. The speaker expresses hope for a drop back to 15-17 (or even lower, as seen historically in 2024), but notes uncertainty—if the VIX breaks certain levels (implied around higher readings or failure to contain), it could signal more market downside. A flush lower is possible, but stabilization might prevent worse outcomes, advising caution over the weekend.
