- 2026-08-03
- Posted by: kimsite
- Categories: Insights, Volume Analysis
Broadening Holds, Supply Lines Still Need Fuel
The S&P 500 closed higher on the week but, after stumbling early, closed inside last week’s range. Under the continuing shadow of the Iran conflict, fragile peace discussions, and renewed concern around the Strait of Hormuz, investors remain caught between risk appetite and geopolitical caution. Recent reporting continues to point to a tense Middle East backdrop, with U.S., Iran tensions, shipping route concerns, and energy volatility still part of the battlefield.
Volume in some ways improved, but in other ways disappointed. Weekly S&P 500 Capital Weighted Volume finished with 55% of activity to the upside. Upside volume was above average, and total volume was slightly above average. Capital flows were also constructive, with 55% of Capital Weighted Dollar Volume registering as inflows. Capital inflows and total capital flows both finished above average.
That is progress. However, the larger supply line picture remains unsettled. The accumulated trends of both S&P 500 Capital Weighted Volume and Capital Weighted Dollar Volume continue to edge closer to their major trend lines, while the S&P 500 price index remains significantly above its own corresponding long-term trend. This is the same tension emphasized in last week’s Second Half Volume Analysis Outlook call: price has built altitude, but volume remains the fuel needed to sustain the climb. Like the strategic petroleum reserves, the tank is low but not empty.
The S&P 500 reclaimed its 50-day intermediate average after slipping below it the prior week. That recovery was constructive, but price remains in a tactical holding pattern beneath resistance and above support. 7300 remains the next key S&P 500 support level, while 7000 carries double reinforcement as both an intermediate price level and trend level. If the campaign were to deteriorate more deeply, the 6300 to 6000 zone would represent critical long-term support.
The important field report came from the old economy core versus the new economy generals. A notable yin and yang developed between the belly of the market and the AI-driven generals. The belly, represented by the Invesco S&P 500 Equal Weight ETF and the Schwab U.S. Dividend Equity ETF, started the week with strength but ended with something of a tummy ache. Meanwhile, the AI generals, represented by the Invesco QQQ Trust Series 1, fell out of bed early in the week before surging back to finish near the front of the formation.
This split reinforces the rotational nature of the current campaign. Leadership is no longer one-dimensional. The old economy core and dividend brass are asserting themselves, even as the AI generals remain capable of sudden counterattacks. The market’s next phase may depend less on one elite command and more on whether these competing forces can begin marching into formation.
The Invesco QQQ Trust Series 1, AKA the generals, closed slightly above 685, a key level highlighted in last week’s Outlook call. That level had been identified as important resistance after the generals previously broke support. Now that the generals have reclaimed it, 685 becomes once again the critical ground to defend. Holding above 685 would suggest a successful retest and recovery. Losing that level would shift attention back toward 600 intermediate support and 550 critical support.
The iShares Russell 2000 ETF, or the troops, remains central to the broadening thesis. In the Outlook, the troops holding above 285 were noted as supportive of the broader leadership handoff. That level remains important. The troops have assumed intermediate leadership over the generals, and as long as they hold their defensive line, the broadening campaign remains intact.
Market breadth closed lower but stayed inside July 10th’s wide range. The NYSE Advance Decline Line did not deliver a fresh breakout this week, but it remains near important highs. The Outlook framed this as one of the brighter parts of 2026, broadening participation, with more stocks joining the advance and the market evolving from “And Then There Were None” toward “And Then There Were Some.”
Cross asset signals remained tied to the Iran war backdrop. Oil declined on light volume, traded below last week’s range early in the period, then closed back inside that range. The energy front remains volatile, inside a wide range. Gold and silver both traded entirely inside last week’s ranges and continue resting near support. The commodity scouts are positioning for a move, but no decisive shofar has sounded from that front yet. Our Outlook also noted that oil and technology have developed something of a yin-yang relationship since the Iran War, with energy often advancing when technology weakens and vice versa.
Overall, the market is still staging its next move. Price recovered. Capital flows mildly improved. Breadth held within range. The generals reclaimed a key level. The troops remain important to the broadening case. The belly of the market showed strength but ended unevenly. The campaign no longer appears dependent on a single elite command. Rather than being pulled higher by the generals alone, the advance is now supported by a stronger core across the broader ranks.
Risk Command
This week the tactical picture improved modestly, but it does not warrant complacency. Capital Weighted Volume and Capital Weighted Dollar Volume were only mildly constructive on the week, yet their accumulated trends remain too close to major support while price remains extended above trend. Breadth remains constructive but has not decisively broken higher. The generals reclaimed important ground, but have little room to defend it.
A disciplined risk management approach remains the proper command posture. Investors should respect the broadening but not chase without confirmation. Position sizing, diversification, support discipline, and confirmation from Capital Weighted Volume and Capital Weighted Dollar Volume remain essential.
If the Invesco QQQ Trust Series 1 holds 685, the iShares Russell 2000 ETF holds 285, and breadth pushes toward new highs while volume trends improve, the bulls may regain stronger command. If the generals lose 685, volume rolls over, or breadth breaks down, defensive positioning may take priority over prediction.
For now, the broader ranks are holding, the brass commanders remain relevant, the troops are still in the field, and the generals have reclaimed a critical ridge. The army remains on the battlefield, but the supply lines still need fuel. In markets as in war, the objective is not to predict every skirmish, but to manage risk before it manages you and let volume confirm the next advance.
Grace and peace,
BUFF DORMEIER, CMT
Updated: 8/3/2026. 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.
