SPY Trends and Influencers March 19, 2022

• Posted by Greg Harmon
• on March 19th, 2022

Last week’s review of the macro market indicators saw heading into March options expiration, equity markets continuing to show weakness in choppy trading. The new week would likely be headline driven again with the Ukraine – Russia conflict and the FOMC meeting adding volatility. Elsewhere looked for Gold to continue its uptrend while Crude Oil pulled back in its uptrend. The US Dollar Index continued to move to the upside while US Treasuries pulled back in their downtrend. The Shanghai Composite looked to have established a downtrend while Emerging Markets continued their move lower.

The Volatility Index looked to remain elevated making the path difficult for equity markets. Their charts looked weak, especially the SPY and the QQQ on the longer timeframe. On the shorter timeframe both the QQQ and SPY were choppier. The IWM held in consolidation on both timeframes, showing relative strength.

The week played out with Gold pulling back sharply along with Crude Oil which saw late week strength reverse the plunge. The US Dollar bounced back to the prior high and then met resistance while Treasuries fell to a 2⅟₂ year low. The Shanghai Composite found support and started higher after closing a gap from July 2020 while Emerging Markets also found support and rose the back half of the week.

Volatility fell back below long term resistance but it remains elevated. This relieved some pressure on equities and they responded by moving higher starting Tuesday. All continued into Friday. This resulted in the SPY reaching a key short term resistance level and stalling while the QQQ approaches a similar short term resistance level. The IWM move bring it back towards long term resistance at what was prior support. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in short term consolidation in a downtrend. It tested the bottom of the range Monday and then reversed Tuesday. That was the start of a 4 day run higher where it gained over 1% each day. This was only the 15th time this has happened in the past 94 years, and only the 6th since the end of World War II. It ended the week making its first higher high in 2022, back over the 50 day SMA and pushing the Bollinger Bands® open higher on the daily chart. The RSI is at a 2⅟₂ month high and nearing a move back into the bullish zone. The MACD is rising towards zero.

The weekly chart shows a strong candle driving through resistance at prior support and finishing at the high of the week. The RSI on this timeframe is back at the midline and rising with the MACD leveling in negative territory. There is resistance higher at 447 and 450 then 454 and 457 before 460 and 463.50. Support lower comes at 444 and 441 then 437.50 and 435.50 before 430.50 and 428.50. Possible Reversal Higher.

SPY Weekly, $SPY

With the first Fed tightening and March Quadruple Witching behind, equity markets showed renewed strength. Elsewhere look for Gold and Crude Oil to pause in their uptrends. The US Dollar Index also looks to consolidate the recent gains while US Treasuries continue the downtrend. The Shanghai Composite looks to continue the trend lower along with Emerging Markets, although the latter might be ready for a reversal.

The Volatility Index looks to be easing from elevated levels making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe. On the shorter timeframe both the QQQ and SPY are showing real promise as they finished at higher highs for the first time in 2022. The IWM also shows some promise as it tests resistance at the long term range. Use this information as you prepare for the coming week and trad’em well.

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