SPY Trends and Influencers June 4, 2022

• Posted by Greg Harmon
• on June 4th, 2022

Last week’s review of the macro market indicators saw heading into the Memorial Day Holiday, the unofficial start of summer, that equity markets had their strongest showing in nearly 2 months. Elsewhere looked for Gold ($GLD) to pause in its uptrend while Crude Oil ($USO) consolidated in its move higher. The US Dollar Index ($DXY) continued to pullback in the uptrend while US Treasuries ($TLT) bounced in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term trend higher while Emerging Markets ($EEM) continued the downtrend.

The Volatility Index ($VXX) looked 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 showed strong reversals off of key Fibonacci retracement levels. These indicated more upside to come.

The week played out with Gold pushing to the upside Thursday and Friday while Crude Oil broke consolidation to the upside. The US Dollar found support and held in consolidation while Treasuries fell back from resistance. The Shanghai Composite continued to move higher while Emerging Markets held under resistance at prior support.

Volatility dropped back to a 6 week low but remained elevated. This took some pressure off equities. The equity index ETF’s all moved mainly sideways though after the strong finish to last week, digesting the move at the recent highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week following a strong 3 day move higher. It printed an inside day on Tuesday to start the week and then a broader red candle on Wednesday. Thursday reversed that to the upside and then Friday made for another red inside candle to end the week little changed. The daily chart shows the consolidation between two prior support levels, one now acting as resistance. The RSI is holding over the midline with the MACD rising but negative.

The weekly chart shows the price held over the 100 week SMA as it consolidated. The RSI remains in the bearish zone with the MACD level and negative. There is resistance at 411 and 413.75 then 416 and 420 before 423 and 425.50 then 428.50. Support lower comes at 407.25 and 405.50 then 403.50 and 400.50 before 397.50 and 394.50. Consolidation.

SPY Weekly, $SPY

Heading into the second week of June and the last week before the next FOMC meeting, equity markets took a breather, digesting the strong finish to the prior week. Elsewhere look for Gold to pause in its short term move higher while Crude Oil drives towards a retest of the March highs. The US Dollar Index continues to hold just below resistance while US Treasuries move lower. The Shanghai Composite looks to continue the short term move higher while Emerging Markets continue their downtrend.

The Volatility Index looks to remain slightly elevated making the path somewhat easier for equity markets to the upside. Their charts failed to follow through on last week’s strength though, leaving them in consolidation without making a higher high and lacking momentum on the shorter timeframe. On the longer timeframe it is too soon to tell if the IWM, the QQQ and the SPY are reversing or setting up for the next leg lower. Look for more uncertainty and sideways consolidation. Use this information as you prepare for the coming week and trad’em well.

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