SPY Trends and Influencers September 18, 2021

Last week’s review of the macro market indicators saw heading into the September Options Expiration week, equity markets had started what has been their monthly pre-expiry pullback for the 5th month in a row. Elsewhere looked for Gold ($GLD) to consolidate while Crude Oil ($USL) also spent time moving sideways. The US Dollar Index ($DXY) continued in an intermediate term consolidation while US Treasuries ($TLT) consolidated at the retest of the 2019 highs. The Shanghai Composite ($ASHR) looked to break out of a long term broad consolidation to the upside while Emerging Markets ($EEM) consolidated in a short term bull flag.

The Volatility Index ($VXX) looked to be creeping higher, making the path harder for equity markets to the upside. Their charts remained strong, especially on the longer timeframe for the $SPY and $QQQ with the $IWM in the long term consolidation. On the shorter timeframe the SPY, the IWM and the QQQ looked to find an easier path to the downside short term.

The week played out with Gold holding in place, but then it took a dive Thursday while Crude Oil also held early in the week before moving higher. The US Dollar broke its consolidation to the upside late in the week while Treasuries jumped Tuesday but fell back the rest of the week. The Shanghai Composite stalled at the retest of the February highs and fell back sharply while Emerging Markets dropped lower, ending near the low of the week.

Volatility slowly fell back through Thursday but then jumped back near last week’s close to end the week. This stopped the bleeding Monday for equities and then they chopped around through the week. The SPY moved lower again Friday and was joined by the QQQ with the IWM continuing its sideways chop. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week following a weak Friday session that ended below the 20 day SMA. It bounced around that level through Thursday before making another move lower Friday and closing below the 50 day SMA for the first time in 3 months. This 5th monthly pullback into options expiration has extended more than twice as long as the prior four times but has also been shallower.

The daily chart shows the price at the lower of the Bollinger Bands® with the RSI testing the June low. A reversal in price higher would trigger a Positive RSI Reversal versus the July low and a target to 459. The MACD is falling but remains in positive territory.

The weekly chart puts the pullback in perspective. Price still remains well above the 20 week SMA. The RSI on this timeframe has pulled back from overbought territory while the MACD is dropping from a lofty plateau. There is support lower at 441 and 437.50 then 436 and 430.50 before 428.50. Resistance above comes at 444 and 447 then 449 and 451 before 454. Pullback in Uptrend.

SPY Weekly, $SPY

With the September Triple Witching in the books, equity markets continue to show some signs of short term weakness. Elsewhere look for Gold to continue its pullback in consolidation while Crude Oil continues a short term move higher. The US Dollar Index continues to move to the upside while US Treasuries consolidate. The Shanghai Composite looks to continue to pullback from resistance while Emerging Markets continue a short term move lower.

The Volatility Index looks to remain at moderate levels removing the stimulus for equity markets to the upside. Their charts reflect this, especially on the shorter timeframe with the SPY and QQQ continuing to pullback. On the longer timeframe the QQQ and SPY remain in healthy uptrends. The IWM remains detached from them in consolidation on both timeframes. Use this information as you prepare for the coming week and trad’em well.

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