SPY Trends and Influencers January 14, 2023

Last week’s review of the macro market indicators saw with the first week of 2023 in the books, equity markets showed resilience with a rebound to end the week higher. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) consolidated in a downtrend. The US Dollar Index ($DXY) continued to drift to the downside while US Treasuries ($TLT) were poised to reverse higher in their downtrend. The Shanghai Composite ($ASHR) looked to continue in broad consolidation while Emerging Markets ($EEM) established a short term uptrend.

The Volatility Index ($VXX) looked to remain in the normal range making the path easier for equity markets to the upside. Their charts remained vulnerable to further downside on the longer timeframe. On the shorter timeframe both the $IWM and $SPY were showing some promise following a Santa Claus Rally while the $QQQ was lagging behind. The S&P 500 maintaining over 3839.50 Monday would give a second early year bullish indicator. If that happens traders would look for the trifecta with a positive January to round it out and give another bullish signal.

The week played out with Gold pushing to an 8 month high and closing over 1900 while Crude Oil moved back higher in consolidation. The US Dollar accelerated to the downside closing at a 7 month low while Treasuries closed in on a higher high which would confirm a reversal. The Shanghai Composite held in a tight range while Emerging Markets continued to move higher.

The Volatility Index fell to a 52 week low ending in the teens. This put a wind at the backs of equities by Tuesday and they responded with a 3 day move higher. All found saw early profit taking Friday before recovering to end the week at the high. This resulted in the SPY and QQQ approaching falling trend resistance since the start of the move lower. The IWM continues to improve as well. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week breaking up out of a short term consolidation at the 38.2% retracement of the post pandemic move higher. It has also confirmed a Santa Claus Rally and was a positive day Monday away from adding a 1st 5 Days of January indicator to the plus column. A positive close for the month of January, added to these two indicators, would give a positive forecast for the year. It did hold higher Monday and every other day this week to close back over the 200 day SMA and closing in on 400. The daily chart shows the RSI is back in the bullish zone with the MACD positive and rising.

Shifting to the weekly chart it printed a second strong candle taking price to falling trend resistance near the 50 week SMA. The RSI is moving up from the midline with the MACD rising but negative. There is resistance at 400.50 and 403.50 then 405.50 and 407.50 before 411 and 413.50 then 417.50. It will take a move over 411 to confirm a higher high and an uptrend. Support lower comes at 397.50 and 394.50 then 391 and 389 before 386 and 382 then 380. Short Term Trend Higher.

SPY Weekly, $SPY

Heading into January options expiration, equity markets showed strength rising close to a test of important resistance. Elsewhere look for Gold to continue to move higher while Crude Oil consolidates in a tightening range. The US Dollar Index continues to move to the downside while US Treasuries come closer to an uptrend reversal. The Shanghai Composite looks to possibly shift to an uptrend while Emerging Markets confirm an uptrend.

The Volatility Index looks to remain normal and stable 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 QQQ and SPY are close to testing trend resistance with the IWM on the verge of confirming a trend reversal higher if it can continue through resistance. Use this information as you prepare for the coming week and trad’em well.

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