SPY Trends and Influencers September 16, 2023

• Posted by Greg Harmon
• on September 16th, 2023

Last week, the review of the macro market indicators saw heading into the September options expiration, equity markets showed some exhaustion after a promising move higher the prior week. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) continued to move higher in a break out. The US Dollar Index ($DXY) continued to move to the upside while US Treasuries ($TLT) continued their pullback. The Shanghai Composite ($ASHR) looked to continue to move lower while Emerging Markets ($EEM) consolidated in a range.

The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts looked strong still on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY had put in lower highs on the bounce giving some pause. The $IWM continued to wallow in broad consolidation on both timeframes.

The week played out with Gold continuing to drift lower before finding support Thursday and bouncing to end the week little changed while Crude Oil continued to move higher all week. The US Dollar pulled back Monday and then reversed to end the week higher while Treasuries drifted lower later in the week. The Shanghai Composite continued to fall along its moving average while Emerging Markets held in a tight range.

The Volatility Index dropped down to a new 32 month low intraday Friday before bouncing back to the low teens. This movement put initial pressure on equities and they started the week with a 3 day chopfest. All raced higher Thursday post all the inflation data and then reversed Friday as Quad Witching unfolded. This resulted in the SPY, the IWM and the QQQ ending back near the bottom of the recent consolidation ranges. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week rebounding off a trip down to the 20 day SMA on the daily chart. By Thursday it had moved up to falling trend resistance and it stalled. Friday saw a trend day lower bring it back down through the 20 day SMA and at support. The RSI is dropping through the midline with the MACD flat and slightly positive.

The weekly chart shows a second week heading lower from a lower high. That is the bad news. But it remains above the 20 week SMA – the good news. The RSI on this timeframe is also holding in the bullish zone with the MACD falling but positive. There is support lower at 437.50 and 435.50 then 430 and 428.50 before 425.50. Resistance higher is at 444 and 447 then 451 and 454 before 457 and 460. Consolidation.

SPY Weekly, $SPY

With the September quad witching options expiration in the books and heading into next week’s FOMC meeting, equity markets had a weak close out after holding firm. Elsewhere look for Gold to continue to consolidate under 2000 while Crude Oil continues the trend higher. The US Dollar Index continues to drift to the upside toward a break out while US Treasuries trend lower. The Shanghai Composite looks to continue the trend lower while Emerging Markets continue in broad consolidation.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong on the longer timeframe, consolidating a trend move higher. On the shorter timeframe both the QQQ and SPY are showing a bit more weakness. The IWM just continues to motor along sideways in consolidation on both timeframes. Use this information as you prepare for the coming week and trad’em well.

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