SPY Trends and Influencers December 31, 2022

• Posted by Greg Harmon
• on January 1st, 2023

Last week’s review of the macro market indicators saw with 4 trading days left in 2022, equity markets showed some divergence. The SPY and IWM had put in consolidation weeks, saved by end of week moves higher while the QQQ continued to move lower and was approaching a retest of the year’s low. Elsewhere looked for Gold ($GLD) to consolidate around 1800 while Crude Oil ($USO) consolidated in the downtrend. The US Dollar Index ($DXY) looked to pause in the downtrend while US Treasuries ($TLT) resumed the move lower.

The Shanghai Composite ($ASHR) looked to have reversed to a short term downtrend while Emerging Markets ($EEM) consolidated. The Volatility Index ($VXX) looked to remain in a normal range making the path easier for equity markets to the upside. Their charts continued to look weak, especially the $QQQ on the longer timeframe. On the shorter timeframe both the $IWM and $SPY were trying to consolidate and had possibly put in a bottom, while the QQQ diverged as it continued lower.

The week played out with Gold tightening the consolidation while Crude Oil printed a short term bullish pattern. The US Dollar dropped to close at its lowest level in nearly 7 months while Treasuries dropped early and then consolidated at 5 week lows. The Shanghai Composite bounced off a retest at the November low while Emerging Markets broadened the consolidation range.

Volatility held in a tight range in the normal zone. This let equities move with the flow in light end of year trading. All moved lower early in the week before a bounce Thursday and then and small drop Friday. This had the SPY end the year at the 38.2% retracement of the post pandemic move and the QQQ retesting the year’s low. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week finding support at the 38.2% retracement of the post pandemic move higher after pulling back from a lower high. It held in a tight range on the week ending almost unchanged. The daily chart shows the RSI floating around in no man’s land moving sideways in the 40’s with the leveling after a drop into negative territory. Some indecision in this chart as it build what could be a higher lower just a base before dropping to a new low.

The weekly chart shows a second doji week after the 2 pullback weeks, giving more weight to the possibility of a bottom. The RSI on this timeframe is holding flat just under the midline with the MACD level and negative. There is resistance at 386 and 389 then 391 and 394.50 before 397.50 and 400.50. Support lower comes at 382 and 380 then 376 and 373 before 369 and 364.50. Short Term Pause in Downtrend.

SPY Weekly, $SPY

With 2022 in the books, equity markets had their worst year since 2008 and the 7th worst in the last 96 years. Good Riddance 2022! Elsewhere look for Gold to potentially build an uptrend while Crude Oil moves in a short term uptrend. The US Dollar Index continues in a downtrend while US Treasuries resume their downtrend. The Shanghai Composite looks to continue the short term consolidation while Emerging Markets consolidate.

The Volatility Index looks to remain in the normal range making the path easier for equity markets to the upside. The charts of the SPY and IWM look to be in limbo, moving sideways as a potential bottom. On the shorter timeframe the Santa Claus Rally is in jeopardy with 2 days trading left to maintain a slight gain. The QQQ has been the weakest since mid-December now retesting the low of the year. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview December 31, 2022

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus