CHIEF TECHNICAL ANALYST, BUFF DORMEIER, CMT^Ⓡ

August awakened the troops (iShares Russell 2000 ETF), with the market closing on another bullish note as the broader forces once again led the charge. Their advance rekindled a sense of new hope, as long-neglected ranks stepped forward to breathe life into what has been a highly concentrated, capital-weighted battlefield.

Yet on the horizon a gathering storm may loom. Last week’s notes on the supply lines painted “a murkier picture”, revealing “early signs of stress”. While the S&P 500 price index finished up a modest 0.27%, the foundation beneath told a different tale: S&P 500 Volume showed significant outflows, with downside volume nearly doubling upside volume. Even more telling, both the accumulated trends of Capital-Weighted Volume and Capital-Weighted Dollar Volume, each of which had led powerfully higher since their May breakout, curled lower for the first time since advancing.

Still, the troops marched with vigor, closing the week up 3.48%. The brass commanders – SCHD (Schwab U.S. Dividend Equity ETF), up 2.34%, and RSP (Invesco S&P 500 Equal Weight ETF), up 2.07%, both pressed forward as well. The 1.76% weekly spread between RSP and SPY was the strongest in favor of equal weight this year, easily eclipsing the prior 1% mark from January 17th. Meanwhile, the generals (QQQ – Invesco QQQ Trust), long the tip of the spear, were the only unit to retreat, down -0.87%. The resulting 4.35% spread between the troops and the generals was the widest seen in recent memory, an echo of our And Then There Were None theme, as the once-dominant few continue to slip away one by one.

In another ray of hope, despite the stumble in capital flows, Friday (8/22) delivered a strong 90% upside day, with 96% of Capital-Weighted Volume to the upside and 98% of Capital Flows registering as inflows. The troops also cleared the first step of the “two-step” breakout, moving through 232 with the PR bar set at 245 left as the final test. For now, market breadth may be the key tell for troop momentum. The NYSE Advance–Decline Line ended the week at a new weekly high, though still confined within the prior week’s range. A breakout would place it on the cusp of new all-time highs, an encouraging sign for the troops. Eyes will also be on Nvidia (NVDA) earnings, where the delta between price action and volume momentum could prove pivotal. I hope to have more details on this interesting dynamic for you soon.

Yet even amid these flickers of new hope, ominous clouds gather. Both the S&P 500 and the generals closed the week with hanging man candles. In candlestick lore, this figure often emerges at the end of a rally, appearing resilient at first glance, yet leaving a long shadow of sellers beneath. The image is one of a scaffold on the battlefield: the higher the climb, the greater the danger if footing falters. For the generals, the market’s elite, this is less a sign of triumph than a warning gallows on the horizon, hinting that their reign could possibly soon be tested.

Thus, the market stands at a crossroads. The troops rally with renewed strength, suggesting a new hope. Yet the generals hang suspended in silhouettes of doubt, evoking the chill of a gathering storm. Whether this proves the dawn of a broadening advance or the prelude to further attrition remains uncertain. Nonetheless, both bullish shofars and bearish warnings have been posted for those seeking to understand the sign of the times.

In such moments where hope and storm clouds coexist, disciplined investors must prepare for multiple outcomes. A tactical, risk-managed approach can help safeguard portfolios against the storm while still leaving room to capture the rewards of new advances.

Grace and peace my friends,
BUFF DORMEIER, CMT®

Updated: 8/25/2025. 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.