CHIEF TECHNICAL ANALYST, BUFF DORMEIER, CMT^Ⓡ

The market’s bullish charge faltered as August opened with a sharp reversal, catching the ranks off guard and shifting the tide of sentiment. What had been an orderly advance quickly devolved into a disjointed retreat. This past week, volume surged above average, but it was not the sound of reinforcements. It was the roar of withdrawal. Capital outflows swelled to high levels, revealing a sudden change of character in the market’s underlying structure.

Throughout this rally, the brass commanders represented by the high-quality dividend brass commanders (SCHD Schwab US Dividend Equity ETF), have often been a safe haven during pullbacks. But not this time. This past week they finished down -3.33%, joined by the troops (IWM – iShares Russell 2000 ETF) who fell -3.94%. The generals (QQQ – Invesco QQQ Trust), representing market leadership, held up better but still declined -2.22%.

The Last Day of July – Even Children get older
The bullish month of July ended not with a fanfare, but with a fading chord. On the final trading day, the S&P 500 set new intraday highs only to finish the session near its lows, closing the month on a sour note. Capital flows were the strongest since the historic April 9^th reversal day, but unlike then, the direction was not so one-sidedly bullish. Capital Weighted Volume was above average, with 64% being outflows. It was a turn of tone that echoed a verse from Landslide with hope turning quietly into uncertainty.

The First Day of August – I’m getting older too
If the last day of July ended on a sour note, the first day of August began completely out of the trends bullish tune. Historically, August is already regarded as the worst performing post-election month according to Jeffery Hirsch, author of the Stock Trader’s Almanac. This August appears poised to possibly follow the cyclical script. The S&P 500 gapped lower at the open and never found footing, closing near its session lows. Volume was elevated but less so than the previous day’s campaign and the day’s composition was decisively bearish. A staggering 95% of Capital Weighted Volume was to the downside, with 97% of flows pulling capital out of the market. It was a moment where the rhythm of progress shifted and then there were none left reflecting when the landside comes.

Weekly Picture and Tactical Shifts – I’ve been afraid of changing
For the full week, Capital Flows were significantly above average, but again, the imbalance was striking as outflows dominated. Capital Weighted Volume was slightly above average, but the downside made its presence known. Roughly 65% of the volume was to the downside, underscoring the strength of the reversal. Yet, in the context of the longer-term trend, the damage appears more cosmetic than structural. Both the accumulated Capital Weighted Volume and Capital Flows merely flattened. They did not reverse trend. They continue to lead price higher and remain well above their respective trendlines.

However, this week’s action did impose damage to breadth. The NYSE Advance–Decline Line erased not only last week’s progress, but the entire breadth gains made during July. While it remains in an uptrend, its momentum is now bending downward. That shift should not be ignored. Another sign of internal weakness lies in volume-price momentum. The Capital Weighted Money Flow Index (CW-MFI), one of our proprietary leading indicators, has been diverging bearishly from price since the former January highs. After peaking on January 12th, CW- MFI fell to its zero line (50 reading) one week before the April bottom, then bounced corresponding to the price bottom. But since the post-correction high on July 11th, CW-MFI has trended lower again. It now teeters towards the zero line once again. Whether it holds or breaks beneath may be a crucial data point to watch. A bounce could potentially reignite bullish momentum, but a break may suggest a deeper rotation is underway.

Positioning and Tactical Lines – sail through the changing ocean tides
Among the units, the troops failed to break through the 230 resistance ceiling and now hover just above the critical 210 support line in the sand. Volume at price analysis reveals a heavy buildup of prior support near 208, making this zone strategically important. Meanwhile, the generals closed the week near their lows, forming a bearish engulfing pattern. If QQQ fall further, holding above 540 becomes mission-critical for maintaining control of the short term campaign. Meanwhile, the S&P 500 also closed near support at 6200 and printed its own bearish engulfing candle. Key supports now lie at 6100 and 6000, with 6059 and 5940 representing zones to watch closely.

Summary and Risk Command – handle the seasons of my life
The market has hit a moment of recalibration. Volume and capital flow trends have not broken, but this week marked a potential change in tone. Breadth is softening. Momentum is waning. Sentiment, once exuberant, now wavers. As in Landslide, change came quickly, and confidence slipped like snow on a mountain. The campaign remains intact, but the weather is shifting.

In times like these, risk management is not just a tactic, it is a discipline. Investors should remain aligned with volume-confirmed trends, yet ready to reduce exposure or rebalance if key levels fail. Tactical stops, position sizing, and maintaining dry powder are not signs of retreat. They are signs of strength and readiness. Follow the money, respect the flow, and always prepare for the turn. And then there were none left unguarded.

Grace and peace my friends,
BUFF DORMEIER, CMT®

Updated: 8/4/2025. Historical references do not assume that any prior market behavior will be duplicated. Past performance does not indicate future results. This material has been prepared by Kingsview Wealth Management, LLC. It is not, and should not, be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate their ability to invest for the long term. Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser.