SPY Trends and Influencers September 2, 2023

Two weeks ago, the review of the macro market indicators saw with the August options expiration in the books, equity markets continued to be under pressure heading into the coming week’s FOMC Jackson Hole Meeting. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) pulled back in consolidation. The US Dollar Index ($DXY) continued to drift to the upside while US Treasuries ($TLT) trended lower. The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) looked to continue to pullback in consolidation ranges.

The Volatility Index ($VXX) looked to remain low but with upside risk making the path harder for equity markets to the upside. The charts of the $SPY and $QQQ still looked strong on the longer timeframe. On the shorter timeframe the QQQ had broken the June low and the SPY was approaching it, turning both from short term down moves to trending lower. The $IWM continued in a broad consolidation that started April 2022.

The past week played out with Gold finding support and pushing to the upside while Crude Oil also got its footing and reversed to close at a 9 month high. The US Dollar found support on a pullback and bounced back to last week’s high while Treasuries rose all week only to get knocked back Friday following the non-farm payroll report. The Shanghai Composite found support managed a weak bounce while Emerging Markets also found support and rose the back to 3 week highs.

The Volatility Index removed that upside risk and fell back ending near the lows of the year. This took the pressure off equities and they responded by moving higher all week. All saw some profit taking early Friday with the IWM then continuing higher while the SPY and QQQ stabilized. This resulted in the QQQ filling the August 2nd gap with the SPY close to doing the same. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week holding in consolidation after finding a bottom last week. It moved to the top of consolidation Monday and then leapt higher Tuesday. It continued the rest of the week, nearly filling the August 2nd gap down on the daily chart. The Bollinger Bands® are opening higher with the RSI on the daily chart just shy of a move into the bullish zone and the MACD positive and rising.

The weekly chart shows confirmation of a reversal higher and strong candle. Price never fell below the 20 week SMA as well. The RSI is rising in the bullish zone with the MACD turning to cross up and positive. These suggest a healthy correction is now over. There is resistance at 454 and 457 then 460 and 463.50 before 466 and 470. Support lower comes at 451 and 447 then 444 and 437.50 before 435.50 and 430. Resume Uptrend.

SPY Weekly, $SPY

Heading into the unofficial end of summer Labor Day holiday, equity markets showed resilience with a rebound higher off support ending the downtrend. Elsewhere look for Gold to continue to consolidate near its high while Crude Oil looks to start a trend higher. The US Dollar Index continues its short term trend to the upside while US Treasuries stall in their pullback. The Shanghai Composite looks to pause in the downtrend while Emerging Markets consolidate.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY also look better to the upside. The IWM looks strong on the shorter timeframe but stuck in consolidation on the longer scale. Use this information as you prepare for the coming week and trad’em well.

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