SPY Trends and Influencers April 17, 2021

• Posted by Greg Harmon
• on April 17th, 2021

Last week’s review of the macro market indicators saw heading into April options expiration and earnings season, equity markets continued to show strength with the large cap stocks leading the way. Elsewhere looked for Gold ($GLD) to continue its short term move to the upside while Crude Oil ($USL) continued to consolidate its long move higher. The US Dollar Index ($DXY) continued to pullback in its uptrend while US Treasuries ($TLT) bounced in their downtrend. The Shanghai Composite ($ASHR) looked to consolidate in its uptrend while Emerging Markets ($EEM) digested lower after their move higher.

The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe with the $SPY leading the way then the $QQQ rebounding and the $IWM holding. On the shorter timeframe both the QQQ and SPY looked strong as they moved into new highs while the IWM continued its consolidation.

The week played out with Gold pausing early but then pushing to the upside late in the week while Crude Oil moved up out of consolidation. The US Dollar continued lower, slowing as it hit the March lows while Treasuries jumped up out of consolidation later in the week. The Shanghai Composite pulled back to the bottom of the recent consolidation range and then bounced while Emerging Markets moved back up to resistance.

Volatility continued to move lower, making new 52 week lows.. This kept the wind in the sails driving equities and the broad market responded by moving higher. The SPY had the strongest trend week while the QQQ tripped mid week before continuing and the IWM sat on the bench early in the week but caught up Wednesday with a big move 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 a new all-time high after a strong Friday finish. It continued Monday but at a slower pace and through Tuesday, making 2 more all-time highs. Wednesday ended the streak with a consolidation day and then it added two more up days and all-time highs to finish the week. Friday’s doji candle will have talk arise about a top, especially with price extended from the 20 day SMA on the daily chart. The RSI is also into overbought territory with the MACD nearing the September peak.

The weekly chart shows the thrust higher breaking over the 161.8% extension of the retracement of the pandemic drop. As it does so the Bollinger Bands® are opening. The price finished outside of the Bollinger Bands, a bit stretched, with the RSI moving into overbought territory and the MACD turning higher. There is no resistance higher, but a Measured Move and the 200% extension of the retracement would take it to 458. Support lower comes at 413.50 and 408 then 407 and 403.50 before 400.70 and 397 then 395. Uptrend.

SPY Weekly, $SPY

With April options expiration in the books, large cap equity markets continue to show strength moving to all-time highs, with the small caps lagging behind in consolidation. Elsewhere look for Gold to continue its reversal higher while Crude Oil moves out of consolidates to the upside. The US Dollar Index continues to pullback in its short term move higher while US Treasuries are rebounding in their downtrend. The Shanghai Composite looks to pause in its move higher while Emerging Markets consolidate the pullback in their uptrend over long term support.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe, especially the large caps. On the shorter timeframe both the QQQ and SPY driving higher in strong fashion, while the IWM consolidates just under the highs. Use this information as you prepare for the coming week and trad’em well.

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