SPY Trends and Influencers December 5, 2020

Last week’s review of the macro market indicators saw heading into the first week of December, equity markets had moved out of consolidation and were showing strength. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USL) drove higher. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) resumed the move lower. The Shanghai Composite ($ASHR) looked to continue press against resistance while Emerging Markets ($EEM) trended to the upside.

The Volatility Index ($VXX) looked to continue towards a new lower range making the path easier for equity markets to the upside. Their charts were looking strong again, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY were starting to break ranges higher with the $IWM leading them to the upside.

The week played out with Gold finding support and pushing back higher while Crude Oil paused in its move until a shift higher Friday. The US Dollar continued the move lower ending at 2½ year lows while Treasuries fell back to the November lows. The Shanghai Composite continued to press against resistance while Emerging Markets are approaching the January 2018 high.

Volatility has stalled in its drift lower. This removed the tailwind on equities and they slowed their moves higher after Tuesday. The IWM got a second wind Friday though and broke to the upside and the SPY followed. The QQQ continued to consolidate and drift higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at an all-time high. It pulled back a tiny bit Monday and printed a Hanging Man candle suggesting a possible top. But then it gapped higher Tuesday and continued to move up, closing at the high for the week and a new all-time high.

The daily chart shows the continued move out of a symmetrical triangle towards the target at 390. The RSI is rising in the bullish zone with the MACD slowly moving up. Note that the Bollinger Bands® have squeezed in and now price is pushing the upper one higher.

The weekly chart shows continuation out of an ascending triangle with a target to 370. It is riding the Bollinger Bands higher and settled outside this week. The RSI is rising in the bullish zone with the MACD rising and extreme. There is no resistance higher. Support lower comes at 364.50 and 360 then 358 and 356 followed by 353 and 348.20. Uptrend.

SPY Weekly, $SPY

With just 18 trading days left in the year, equity markets are seemingly starting to sprint to the finish. Elsewhere look for Gold to continue its short term move higher in the pullback while Crude Oil slowly drifts higher. The US Dollar Index continues to make new lows while US Treasuries continue in their downtrend. The Shanghai Composite looks to be primed to push through resistance higher while Emerging Markets continue their uptrend.

The Volatility Index looks to continue to close the February gap lower making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY are both taking smaller steps higher as the IWM is leading the charge. Use this information as you prepare for the coming week and trad’em well.

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