SPY Trends and Influencers January 30, 2021

• Posted by Greg Harmon
• on January 30th, 2021

Last week’s review of the macro market indicators saw with one week to go in January, equity markets remained strong. Elsewhere looked for Gold ($GLD) to possibly reverse higher out of its pullback while Crude Oil ($USL) continued to move up. The US Dollar Index ($DXY) continued it downtrend while US Treasuries ($TLT) consolidated in their move lower. The Shanghai Composite ($ASHR) looked to continue higher after making 5 year highs while Emerging Markets ($EEM) printed all-time highs, not seem in over 13 years as they continued to move up.

The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY had resumed their paths higher, while the $IWM was taking a breather at new all-time highs.

The week played out with Gold drifting lower until a push to the upside Friday while Crude Oil spent the week chopping around in a $2 range. The US Dollar consolidated slightly off the lows while Treasuries staged an early bounce but fell back later in the week. The Shanghai Composite fell back toward a retest of the recent break out while Emerging Markets pulled back from the all-time high.

Volatility jumped mid week and held at elevated levels. This put pressure on equities and they moved lower. The SPY and QQQ bounced Thursday only to reverse back lower Friday. The IWM found support Wednesday and held there until Friday afternoon, strongest of the three. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just off the all-time high set the prior Thursday. Monday it printed a Hanging Man candle, a possible reversal at a slightly higher level and then Tuesday saw a start to the upside fade and end in a red day. This confirmed the reversal and the price moved lower the rest of the week. It ended below the 50 day SMA Friday at the lower Bollinger Band®. This was the first close below the 50 day SMA since the election. The daily chart shows the RSI falling back through the midline but remaining in the bullish zone. The MACD also dropped but it remains positive in bullish territory.

The weekly chart shows the widest range since the week of the election as well. The RSI on this timeframe remains in the bullish zone but pulling back with the MACD rolling over and about to cross down. Price is still well above the 20 week SMA though. There is support lower at 369 and 364.50 then 360 and 358 before 356. Resistance higher comes at 372.50 and 375.50 before 381.25 and 385. Pullback in Uptrend.

SPY Weekly, $SPY

After a Santa Claus Rally and the first 5 days of January going higher, the trifecta failed to hit as the month of January ended lower. Now that January is in the books, equity markets are showing signs of tiring in their run higher. Elsewhere look for Gold to continue its pullback while Crude Oil consolidates in the uptrend. The US Dollar Index consolidates in the downtrend while US Treasuries pause in their downtrend. The Shanghai Composite and Emerging Markets look to continue the pullbacks in their respective uptrends.

The Volatility Index is rising causing headwinds for the equity markets to the upside. Their charts remain strong on the longer timeframe but extended. On the shorter timeframe the SPY, the IWM and the QQQ are retrenching. There is no major damage yet, but the SPY leading to the downside might be the primary indicator next week. Use this information as you prepare for the coming week and trad’em well.

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