SPY Trends and Influencers July 30, 2022

• Posted by Greg Harmon
• on July 30th, 2022

Last week’s review of the macro market indicators saw with one week left in July, equity markets displayed a second straight week of highly positive correlation, but this time in a move up out of consolidation. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) pulled back in the uptrend. The US Dollar Index ($DXY) continued to pullback in its trend higher while US Treasuries ($TLT) bounced in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term move lower while Emerging Markets ($EEM) continued in a downtrend.

The Volatility Index ($VXX) looked to continue back towards normal levels making the path easier for equity markets to the upside. Their charts were starting to look stronger as they moved up out of consolidation, especially on the longer timeframe. All still had work to do before a full blown reversal could be called. On the shorter timeframe continuation of the moves by the $IWM and $SPY to fill the gaps and the $QQQ higher, with momentum shifting into bullish ranges, would get some cash off the sidelines.

The week played out with Gold holding on a short term consolidation before reversing higher late in the week while Crude Oil found support and also moved higher late in the week. The US Dollar held at support in the pullback while Treasuries stalled in their move under resistance. The Shanghai Composite found support and consolidated in a narrow range while Emerging Markets held in consolidation after a small bounce.

Volatility bounced early in the week but then continued the move lower, ending at a 3 month low in the normal range. This continued to allow equities to move to the upside and they responded with a 4 day move higher. This resulted in the SPY, the IWM and the QQQ ending within striking distance of making an intermediate term higher high. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY entered the week stalling in a short term uptrend. It pulled back to support Tuesday and then reversed to rocket higher the next 3 days. It ended the week printing another higher low and higher high, but still shy of the June high. It did finish over the 100 day SMA for the first time since early April. The daily chart shows the RSI rising into the bullish zone with the MACD positive and climbing.

The weekly chart shows a second strong week higher, finishing at the high and 100 week SMA. The RSI is now crossing the midline with the MACD crossed up but negative. There is resistance at 413.75 and 417.50 then 420 and 423 before 425.50 and 428.50. Support is at 411 and 407.50 then 405.50and 403.50 before 400.50 and 397.50. Great progress this week confirming a short term reversal but still needs a move over 417.50 to confirm a longer term reversal and attract more attention. Short Term Uptrend.

SPY Weekly, $SPY

With July in the books, equity markets are showing strength on the short term and on the cusp of a full blown reversal. Elsewhere look for Gold to continue its short term move higher while Crude Oil consolidates. The US Dollar Index continues in a short term move lower while US Treasuries consolidate. The Shanghai Composite looks to continue in consolidation while Emerging Markets consolidate in the downtrend.

The Volatility Index looks to continue lower towards the normal range making the path easier for equity markets to the upside. Their charts look strong, especially on the shorter timeframe. On the longer timeframe both the IWM and SPY are approaching key levels to confirm an intermediate term reversal. The QQQ did confirm a reversal and now needs to show follow through. Use this information as you prepare for the coming week and trad’em well.

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