SPY Trends and Influencers December 11, 2021

Last week’s review of the macro market indicators saw with only 4 weeks of trading left in 2021, equity markets were showing some weakness. Elsewhere looked for Gold ($GLD) to consolidate while Crude Oil ($USL) pulled back. The US Dollar Index ($DXY) continued to trend to the upside while US Treasuries ($TLT) renewed their uptrend. The Shanghai Composite ($ASHR) looked to consolidate in a broad range while Emerging Markets ($EEM) continued to move lower.

The Volatility Index ($VXX) looked to remain elevated creating strong headwinds for equity markets. Their charts remained mixed with the $SPY and $QQQ strong on the longer timeframe but with building weakness in pullbacks on the shorter one. The $IWM was weak on both timeframes and testing support after a failed break and reversal. It brings to mind the trader adage of “from failed moves come fast moves”.

The week played out with Gold bouncing in a narrow range under the 200 day SMA while Crude Oil reversed to the upside before settling late in the week. The US Dollar consolidated it’s gains in the uptrend while Treasuries gave back all of last week’s gains. The Shanghai Composite moved to 3 month highs in consolidation while Emerging Markets stalled at another lower high in their downtrend.

Volatility subsided back towards normal levels. This eased the pressure on equities and they responded by starting Monday moving higher and then gapping up again Tuesday. This placed the SPY near all-time highs. The SPY held there the rest of the week while the IWM moved lower Thursday and Friday and the QQQ dropping back to the top of the Tuesday gap. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in consolidation after a pullback and sitting on the 50 day SMA. It moved higher Monday and then gapped up Tuesday, filling the gap intraday. It drifted higher through Friday to close the week at a new all-time high. The Bollinger Bands® on the daily chart are starting to drift higher with the move and cross over resistance. The RSI is rising in the bullish zone with the MACD crossed up and rising after a deep reset lower.

The weekly chart shows a strong reversal candle higher off the 20 week SMA. The RSI on this timeframe is also rising in the bullish zone with the MACD turning to cross up. There is intraday resistance higher at 473.50 and then a Measured Move to 494. Support lower comes at 470 and 466 then 463.60 and 460 before 457 and 454 then 450 and 447. Uptrend.

SPY Weekly, $SPY

Heading into December options expiration week, equity markets showed resilience with a rebound from an ugly prior 2 weeks. Elsewhere look for Gold to continue in consolidation while Crude Oil may resume the uptrend. The US Dollar Index continues to trend higher while US Treasuries look to be back in consolidation. The Shanghai Composite remains in consolidation while Emerging Markets continue to trend lower.

The Volatility Index has moved back into the normal range making the path easier for equity markets to the upside. Their charts look strong, especially the large caps and tech stocks. On the shorter timeframe the SPY is leading with a new all-time high, then the QQQ just off the pace. On the longer timeframe both the SPY and QQQ look very strong. The IWM is now back in consolidation and floundering again. Use this information as you prepare for the coming week and trad’em well.

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