SPY Trends and Influencers May 28, 2022

• Posted by Greg Harmon
• on May 28th, 2022

Last week’s review of the macro market indicators saw With May options expiration in the books, equity markets made new lows with the SPY reaching down into bear market territory, joining the IWM and QQQ, before rebounding at the close Friday. Elsewhere looked for Gold ($GLD) to possibly reverse higher while Crude Oil ($USO) consolidated in an uptrend. The US Dollar Index ($DXY) was pulling back in its uptrend while US Treasuries ($TLT) bounced in their downtrend.

The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) continued the downtrend. The Volatility Index ($VXX) remained elevated making the path easier for equity markets to the downside. Their charts looked weak, especially on the longer timeframe as they dipped into oversold territory. On the shorter timeframe both the $QQQ and $SPY sat at 52 week lows while the $IWM was holding only slightly higher.

The week played out with Gold moving up to short term resistance and holding while Crude Oil consolidated as it hit the top of the range. The US Dollar found support in the pullback and consolidated while Treasuries held under resistance at prior support. The Shanghai Composite continued higher while Emerging Markets managed to print a short term higher high. Volatility fell back to recent support but remained elevated.

This eased the pressure on equities and they responded with a 3 day move higher to end the week. This brought the SPY and QQQ back over the milestone 400 and 300 marks and more importantly to the edge of possible short term reversal confirmations. The IWM also made a higher high for the first time since March. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after a touch into bear market territory and strong intraday reversal. It confirmed the reversal with a move higher Monday but then paused Tuesday. It then printed a Three Advancing White Soldiers pattern, a strong 3 day move higher, confirming a trend reversal. The daily chart shows good room to the top of the Bollinger Bands® before need to worry about resistance. The RSI is making a higher high as it pushes back up through the midline and the MACD is crossed up and rising.

The weekly chart shows a strong reversal off of the 38.2% retracement of the post pandemic move higher getting back over the 100 week SMA. The RSI on this timeframe is rising from a touch at oversold with the MACD leveling after a long reset into negative territory. There is resistance above at 416 and 420 then 423 and 425.50 before 428.50 and 430. Support lower comes at 413.75 and 411 then 407.50 and 405.50 before 403.50 and 400.50. Short Term Reversal Higher.

SPY Weekly, $SPY

Heading into the Memorial Day Holiday, the unofficial start of summer, equity markets had their strongest showing in nearly 2 months. Elsewhere look for Gold to pause in its uptrend while Crude Oil consolidates in its move higher. The US Dollar Index continues to pullback in the uptrend while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue the short term trend higher while Emerging Markets continue the downtrend.

The Volatility Index looks to remain elevated, but falling, making the path easier for equity markets to the upside. Their charts all printed reversal patterns on both the short term and long term timeframe. On the shorter timeframe the IWM, the QQQ and the SPY all made higher highs ending the week with Three Advancing White Soldiers patterns indicating a reversal. The longer timeframe also shows strong reversals off of key Fibonacci retracement levels. These indicate more upside to come. Use this information as you prepare for the coming week and trad’em well.

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