SPY Trends and Influencers October 16, 2021

Last week’s review of the macro market indicators saw heading into October options expiration week, that equity markets showed some resilience with a rebound in the larger cap markets. Elsewhere looked for Gold ($GLD) to continue in consolidation while Crude Oil ($USL) drove higher in the uptrend. The US Dollar Index ($DXY) continued to drift to the upside while US Treasuries ($TLT) pulled back in a downtrend. The Shanghai Composite ($ASHR) looked to continue the sideways motion while Emerging Markets ($EEM) trended to the downside.

The Volatility Index ($VXX) looked to remain at moderate levels reducing the downward pressure on equity markets. The $SPY and $QQQ charts looked strong on the longer timeframe and possibly ready to reverse higher again on the shorter timeframe. The $IWM however continued to churn marking time sideways in a nine month channel.

The week played out with Gold pushing to the upside Wednesday only to give it all back Friday back while Crude Oil continued to move higher. The US Dollar held at the recent highs while Treasuries bounced after the pullback. The Shanghai Composite pulled back to support and held while Emerging Markets rebounded to the upside.

Volatility pulled back hard to the July and August lows 52 week lows. This put relieved the pressure on equities mid-week and they moved sharply higher. This resulted in the SPY and QQQ making higher highs with the IWM moving to test the September high. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back from a lower high. It continued to move lower through Tuesday before a Hammer reversal candle Wednesday. From there it moved higher to end at a higher high. This also triggered an Inverse Head and Shoulders pattern on the daily chart with a price objective to at least 454, a retest of the alltime high. The RSI is rising back into the bullish zone with the MACD crossed up and approaching a move to positive.

The weekly chart is also suggesting a reversal higher with a second white candle. The RSI on this timeframe is turned to the upside with the MACD continuing to reset lower. There is resistance at 447 and 450 the 454. Support lower comes at 444 and 441 then 437.50 and 436 before 430.50 and 428.50. Possible Resumption of Uptrend.

SPY Weekly, $SPY

With the October options expiration in the books, equity markets showed signs of a rebound from an ugly 10 week stretch. Elsewhere look for Gold to continue in consolidation while Crude Oil continues in an uptrend. The US Dollar Index continues its short term move to the upside while US Treasuries are in position to possible reverse to the upside. The Shanghai Composite looks to continue the broad drift sideways while Emerging Markets trend lower.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe where they are showing signs of a resumption of the long uptrend. On the shorter timeframe both the QQQ and SPY still have some work to do but are also looking promising. The IWM however remains in the long consolidation with no signs of that changing. Use this information as you prepare for the coming week and trad’em well.

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