SPY Trends and Influencers November 6, 2021

Last week’s review of the macro market indicators saw with just two months left in the year, equity markets were showing renewed strength with a rebound from an ugly 3rd quarter reaching new all-time highs. Elsewhere looked for Gold ($GLD) to continue to consolidate while Crude Oil ($USL) continued to the upside. The US Dollar Index ($DXY) continued to drift to the upside at the edge of confirming a reversal while US Treasuries ($TLT) rebounded to a short term uptrend. The Shanghai Composite ($ASHR) looked to continue to mark time while Emerging Markets ($EEM) tried to hold at support in a downtrend.

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. On the shorter timeframe both the $QQQ and $SPY were also very strong. The $IWM just kept refusing to play though, moving sideways in what was now a 9 month consolidation.

The week played out with Gold recovering from a Wednesday drop on Thursday to look like nothing happened on the week while Crude Oil met short term resistance and pulled back. The US Dollar moved higher to retest the October high while Treasuries held steady until a Friday move to the upside. The Shanghai Composite made fresh 2 month lows in consolidation while Emerging Markets held at support.

Volatility fell back to the 2021 lows putting wind in the sails of the equity indexes that grew stronger after the FOMC meeting. This resulted in all indexes making new all-time highs. The SPY and QQQ each added 5 new highs for an ultra strong week. The IWM finally broke out of the 9 month consolidation and added 4 new all-time highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after back-to-back all-time highs (ATH) to end the prior week. It continued this week adding 5 more new ATH’s for a 7 day streak. It ended the week with a Spinning Top candle that if confirmed Monday could be a reversal signal. During the week it managed to move over the 200% extension of the retracement of the pandemic drop and 470 for the first time. The daily chart shows the RSI ending in overbought territory and the MACD rising and positive.

The weekly chart shows a fifth consecutive week of higher closes ending outside of the Bollinger Bands®. The RSI on this timeframe is poking into overbought territory with the MACD about to cross up. There is no resistance above with the next Fibonacci extension at 504.75. Support lower comes at 457.70 and 454 then 450 and 447 before 444 and 441. Uptrend.

SPY Weekly, $SPY

With the first week of November in the books, equity markets showed great strength with all major indexes finishing at all-time highs. Elsewhere look for Gold to continue a short term uptrend while Crude Oil pulls back in its uptrend. The US Dollar Index continues on the verge of a reversal higher while US Treasuries continue in a short term uptrend. The Shanghai Composite looks to consolidate while Emerging Markets consolidate 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, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY printed possible reversal candles and both are extended. The IWM takes the lead though as it broke a 9 month consolidation higher. Use this information as you prepare for the coming week and trad’em well.

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