SPY Trends and Influencers November 20, 2021
- Posted by Greg Harmon
- on November 20th, 2021
Last week’s review of the macro market indicators saw heading into the November options expiration week, equity markets showed resilience reversing an early week plunge. Elsewhere looked for Gold ($GLD) to continue its new uptrend while Crude Oil ($USO) consolidated at the recent highs. The US Dollar Index ($DXY) also looked to continue its breakout higher while US Treasuries ($TLT) consolidated in their bounce. The Shanghai Composite ($ASHR) looked to continue to churn sideways while Emerging Markets ($EEM) consolidated in a bull flag over long term support.
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 looked to have reversed a small pullback while the $IWM still needed to trigger.
The week played out with Gold consolidating the recent gains while Crude Oil saw some weakness and drifted lower. The US Dollar continued to move to the upside while Treasuries fell back early only to recover and end little changed. The Shanghai Composite held in a tight range while Emerging Markets continued to move in a tight range, extending the flag.
Volatility rose slightly but remained at very low levels. This continued to offer a favorable environment for equities and the SPY and QQQ moved higher all week. The IWM however gave up its break out and fell back to retest the prior high as possible support. This resulted in the SPY and QQQ ending at 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 moving back higher after a shallow pullback. It continued to drift higher, ending the week back near the all-time high. The daily chart shows the RSI is holding on the edge of overbought with the MACD dropping but positive. The Bollinger Bands® have shifted to flat on this timeframe.
The weekly chart shows another tight candle holding at the high but moving back inside the Bollinger Bands®. The RSI on this timeframe is also running flat at the edge of overbought with the MACD crossed up and rising. There is resistance above at 470. Support lower comes at 463.60 and 460 then 457.50 and 454 before 450. Uptrend.
SPY Weekly, $SPY
With the November options expiration in the books, equity markets are looking mixed with large caps and tech strong but small caps showing weakness. Elsewhere look for Gold to continue its move higher while Crude Oil pulls back in its uptrend. The US Dollar Index continues to look strong with more upside while US Treasuries consolidate. The Shanghai Composite looks to consolidate as well while Emerging Markets pullback in a bull flag.
The Volatility Index looks to remain low but rising giving equity markets little to worry about. The charts of the SPY and QQQ look strong on both timeframes but especially on the longer timeframe. The IWM however is looking weak and at risk for a breakdown on both timeframes. A reversal early next week could fix that quickly though. 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)