SPY Trends and Influencers June 5, 2021
- Posted by Greg Harmon
- on June 5th, 2021
Last week’s review of the macro market indicators saw with the month of May in the books, equity markets continued to show resilience, holding in consolidation near all-time highs. Elsewhere looked for Gold ($GLD) to continue its move higher while Crude Oil ($USL) possibly resumed its uptrend. The US Dollar Index ($DXY) looked to continues to move lower while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term trend higher while Emerging Markets ($EEM) consolidated in their uptrend.
The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts were holding strong, especially on the longer timeframe. On the shorter timeframe the $QQQ might be at risk as it consolidated at a lower high after a rebound. The $SPY was a whisker away from new highs though as the $IWM continued to mark time sideways.
The week played out with Gold continuing to the upside early but slammed late in the week before a recovery and Crude Oil resumed its move to the upside. The US Dollar tried to reverse higher late in the week but fell back Friday while Treasuries continued to move in a tight range. The Shanghai Composite consolidated last week’s move higher while Emerging Markets broke out of consolidation to the upside.
Volatility had a small bounce early in the week but fell back hard Friday to close little changed. This put initial pressure on large cap equities and they responded by starting the week dropping from a gap up open Tuesday. They found support by Thursday and reversed to finish the week higher. The small cap equities were nonplussed initially but gapped down to open Thursday before a rebound. This resulted in the SPY and QQQ ending back near all-time highs with the IWM slightly further behind. What does this mean for the coming week? Let’s look at some charts.
SPY Daily, $SPY
The SPY came into the week breaking above a consolidation zone and just below the all-time high. It made a run at the top Tuesday but could not hold up, falling back into Thursday. It opened with a gap down and reversed then was followed by a strong trend day Friday that ended at a new all-time high.
The daily chart shows the last two weeks holding back over the 20 day SMA and the Bollinger Bands® starting to slowly open higher. The RSI is rising in the bullish zone with lots of room above while the MACD is crossed up and positive as it moves higher. The target from the Positive RSI Reversal confirmed May 12 is to 443 and the 200% extension of the retracement of the pandemic drop is at 458 above that.
The weekly chart shows the RSI running flat and strong in bullish territory with the MACD looking like it may avoid a cross down with a kiss of the signal line. The Bollinger Bands on this timeframe are pointing the way higher. There is no resistance above 423. Support lower comes at 420 and 417.40 then 413.75 and 411 before 407 and 403 then 400.70. Consolidation in the Uptrend.
SPY Weekly, $SPY
Summer has unofficially begun with the passing of Memorial Day, and equity markets ended the week stronger after large caps rebounded from a weak start. Elsewhere look for Gold to continue its uptrend while Crude Oil moves to new multi-year highs. The US Dollar Index and US Treasuries continue to consolidate in their downtrends. The Shanghai Composite looks ready to continue higher while Emerging Markets resume their uptrend.
The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts show moves to the top of consolidation ranges on both timeframes. The QQQ looks the most promising on the shorter timeframe with the SPY next and the IWM building a tight pattern. On the longer timeframe all three are consolidating with strong momentum. Use this information as you prepare for the coming week and trad’em well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)