SPY Trends and Influencers May 29, 2021

Last week’s review of the macro market indicators saw with the May options expiration in the books, equity markets had taken a pause. Elsewhere looked for Gold ($GLD) to continue its move higher while Crude Oil ($USL) consolidated in a tight range. The US Dollar Index ($DXY) continued to drift to the downside and 3½ year lows while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue to drift sideways in a broad range while Emerging Markets ($EEM) consolidated over long term resistance in a tightening range.

The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts had all shifted to consolidation on the longer timeframe, with the $SPY the latest to join. On the shorter timeframe the SPY continued to look the strongest with the $IWM in the long consolidation next and the $QQQ with the most work left to do to return to bullish.

The week played out with Gold meeting resistance at 1900 and consolidating while Crude Oil continued to move higher. The US Dollar found support and consolidated while Treasuries continued near the top of their consolidation zone. The Shanghai Composite broke the short term range and started higher while Emerging Markets drifted to the top of the consolidation zone.

Volatility continued toward the April lows making the way easier for equity markets. The SPY and QQQ responded by moving higher Monday and then paused. The IWM joined them, moving higher Wednesday and Thursday. All finished at or near the high of the week. This resulted in the SPY ending back near all-time highs, the QQQ less than 3% away and the IWM less than 4% from the prior top. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at resistance in a short term consolidation below the all-time high. It pushed higher Monday and continued the slow trend higher the rest of the week, ending at its third highest close. The RSI on the daily chart is rising in the bullish zone after a reset lower. The MACD is crossing up also following a rest lower in the bullish zone. There is room to the top of the Bollinger Bands®, which are running flat for now.

The weekly chart shows the consolidation over the 161.8% extension of the retracement of the pandemic drop. The RSI on this timeframe is holding strong in the bullish zone with the MACD rolling toward a cross down. There is resistance above at 423 and then targets to 443 from a Positive RSI Reversal on the daily chart and 458 the 200% extension. Support lower comes at 420 and 417.40 then 413.75 and 411 before 407 and 403 then 400.70. Possible Resumption of Uptrend.

SPY Weekly, $SPY

With the month of May now in the books, equity markets continue to show resilience, holding in consolidation near all-time highs. Elsewhere look for Gold to continue its move higher while Crude Oil possibly resumes its uptrend. The US Dollar Index looks to continues to move lower while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the short term trend higher while Emerging Markets consolidate in their uptrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts are holding strong, especially on the longer timeframe. On the shorter timeframe the QQQ may be at risk as it consolidates at a lower high after a rebound. The SPY is a whisker away from new highs though as the IWM continues to mark time sideways. Use this information as you prepare for the coming week and trad’em well.

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