SPY Trends and Influencers February 27, 2021

• Posted by Greg Harmon
• on February 27th, 2021

Last week’s review of the macro market indicators saw heading into the last week of February that equity markets were showing some fatigue after strong moves up. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USL) might slow and consolidate in the uptrend. The US Dollar Index ($DXY) continued to trend lower while US Treasuries ($TLT) continued their downtrend.

The Shanghai Composite ($ASHR) looked to continue the move higher while Emerging Markets ($EEM) drove for new highs. The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts continued to look strong on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY were now in consolidation over support with the $IWM poised to take the lead after a bounce.

The week played out with Gold pushing to the upside but quickly meeting resistance and dropping back to 9 month lows while Crude Oil continued its move higher. The US Dollar found support and pushed higher Friday while Treasuries made new 52 week lows before a bounce to end the week. The Shanghai Composite fell back all week towards a retest of the break out level while Emerging Markets fell back to the January month end low.

Volatility spiked up to resistance and a lower high before partially easing. This put pressure on equities and they responded by moving lower early in the week. All found support Tuesday and reversed only to fall back again Thursday. Friday was a choppy session for the SPY and QQQ and they ended lower on the week. The IWM worked a steep “V” and then consolidated to end the week slightly lower. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY was slightly off the high made earlier in the prior week, in a short term consolidation, as the week started. Monday it dropped from consolidation and touched the 20 day SMA Tuesday for the first time since the beginning of the month. It continued lower Thursday and reached the 50 day SMA Friday, the last day of the month, much like January month end.  The daily chart shows the RSI is back near the mid line, also like the end of January, with the MACD falling but positive.

The weekly chart shows the topping pattern but without a move to even the 20 week SMA at this point. The RSI is rolling lower in the bullish zone with the MACD about to cross down. There is support lower at 375.50 and 372.50 then 369 and 364.50 before 360. Resistance higher is at 381.25 and 386 then 389 and 393 before 395. Pullback in Uptrend.

SPY Weekly, $SPY

With the month of February in the books, equity markets look fatigued with a bit of weakness. Elsewhere look for Gold to continue its downtrend while Crude Oil moves to the upside. The US Dollar Index continues to trend lower while US Treasuries dropped to a 13 month low in their downtrend. The Shanghai Composite looks to pullback in its uptrend while Emerging Markets drop to retest break out levels in their trend higher.

The Volatility Index looks to continue slightly elevated making the path harder for equity markets to the upside. Their charts continue to look strong on the longer timeframe. But on the shorter timeframe both the IWM and SPY are resetting to the 50 day SMA after being extended while the QQQ is showing more weakening. Use this information as you prepare for the coming week and trad’em well.

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