CHIEF TECHNICAL ANALYST, BUFF DORMEIER, CMT^Ⓡ

Capital-weighted dollar volume flows remained light for the week, with capital inflows totaling an average dollar volume of $40.5 billion, while capital outflows were relatively modest at $36.4 billion. Once again, both Capital Weighted Volume and Dollar Volume closed near all-time highs. The S&P 500 closed the week with a 0.75% gain, outpaced by the generals (NDX 100) with a 0.93% increase and the surging troops (IWM) which increased by 2.25%. Meanwhile, market breadth, as measured by the NYSE Advance-Decline Line, continues to support the price advance with a notable surge within the trading range.

The market’s expansion is evident, marked by the sudden participation in previously lagging sectors such as small-cap stocks. IWM closed the week at a resistance level (201) on above-average volume. From a technical standpoint, the battle of small caps at this resistance level is a key focal point. Despite a 24% increase since their November lows, small caps still significantly trail behind the S&P 500. A breakout above IWM 202 would bring the markets into a state of bullish harmony, but a temporary pause for consolidation may also prove beneficial in the long run.

Grace and peace my friends,

BUFF DORMEIER, CMT®

Updated: 12/26/2023

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