SPY Trends and Influencers March 6, 2021

• Posted by Greg Harmon
• on March 6th, 2021

Last week’s review of the macro market indicators saw with the month of February in the books, equity markets looked fatigued with a bit of weakness. Elsewhere looked for Gold ($GLD) to continue its downtrend while Crude Oil ($USL) moved to the upside. The US Dollar Index ($DXY) continued to trend lower while US Treasuries ($TLT) dropped to a 13 month low in their downtrend. The Shanghai Composite ($ASHR) looked to pullback in its uptrend while Emerging Markets($EEM) dropped to retest break out levels in their trend higher.

The Volatility Index ($VXX) looked to continue slightly elevated making the path harder for equity markets to the upside. Their charts continued to look strong on the longer timeframe. But on the shorter timeframe both the $IWM and $SPY were resetting to the 50 day SMA after being extended while the $QQQ was showing more weakening.

The week played out with Gold dropping back to 9 month lows while Crude Oil drives higher. The US Dollar found support and reversed to 4 month highs while Treasuries held at 13 month lows. The Shanghai Composite continued lower, ending the week at 3 month lows, while Emerging Markets pushed down to the lows of the year.

Volatility rose after an early week pullback but then fell back late Friday end the week slightly lower. This put pressure on equities and they responded by dropping throughout the week. This resulted in the SPY and IWM dropping back at the January lows while the QQQ lead the way even lower. But all 3 reversed hard the 2nd half of Friday to have the SPY end up on the week, with the IWM and QQQ off slightly. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week holding over the 50 day SMA after a pullback. It moved higher Monday closing back over the 20 day SMA but then reversed lower Tuesday. This made for another slightly lower high. It continued lower Wednesday and Thursday opening the Bollinger Bands® to the downside and closing under the 50 day for the first time since the end of January. Friday it opened higher but quickly moved lower. By midday it was reversing higher though and closed up on the day and the week, back over the 50 day SMA.

The RSI on the daily chart is moving up off a low in the bullish zone with the MACD trying to level above zero. The weekly chart shows the long lower shadow on the positive week. It held above the 20 week SMA. The RSI is turning back up strong in the bullish zone with the MACD rolling over and crossing down. There is support lower at 381.25 and 375.50 before 372.50 and 369 then 364.50 before 360. Resistance higher comes at 386 and 389 then 393 and 395. Pause or Pullback in Uptrend.

SPY Weekly, $SPY

The first week of March created some havoc in equity market, whipsawing the Indexes as rotation continues. Elsewhere look for Gold to continue its pullback while Crude Oil continues to move higher. The US Dollar Index may be starting to reverse to the upside while US Treasuries continue in their downtrend. The Shanghai Composite looks to pause in its long term uptrend while Emerging Markets consolidate over long term support.

The Volatility Index looks to remain slightly above normal putting a bit of pressure on equity markets. Their charts continue to look strong on the longer timeframe but not as strong as last week. On the shorter timeframe the SPY, the IWM and the QQQ all look to be moving lower with the QQQ looking the weakest of the 3. Use this information as you prepare for the coming week and trad’em well.  

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