SPY Trends and Influencers November 18, 2023

Last week, the review of the macro market indicators saw with the first full week of November in the books, midcap and large cap equity markets showed continued strength after a slow consolidating start. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) joined it with a turn to the downside. The US Dollar Index ($DXY) continued to drift in consolidation while US Treasuries ($TLT) bounced in their downtrend.

The Shanghai Composite ($ASHR) looked to continue its bounce as well while Emerging Markets ($EEM) consolidated. The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts looked strong, especially on the shorter timeframe. On the longer timeframe both the $QQQ and $SPY looked to continue higher after breaking out of bull flags. The small cap $IWM continued to languish on all timeframes though.

The week played out with Gold finding support and reversing to the upside while Crude Oil continued to make lower prices for the 4th week ,ending at support. The US Dollar broke consolidation to the downside while Treasuries held the bounce from last week but could not make much further headway higher. The Shanghai Composite continued the move higher while Emerging Markets held in their consolidation range.

Volatility continued to trickle lower, ending at a 2 month low. This gave equities a boost and they continued their stair step moves to the upside but with the small caps joining this week. This resulted in the SPY approaching the September highs and the QQQ retesting the July high. The IWM climbed back into its prior consolidation zone. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week continuing higher after a fast move off the October low. It held Monday and then gapped up again Tuesday holding the gains the rest of the week and closing at a new 2 and a half month high. It is now less than 2% from the end of July high print. The RSI is strong in the bullish zone at the edge of overbought but flat on the daily chart. The MACD is positive and climbing with the Bollinger Bands® open higher.

The weekly chart shows a third consecutive week higher and second ending at the high. It is also about to trigger a Cup and Handle pattern that would give a target to 570. The RSI on this timeframe is rising in the bullish zone with the MACD positive and about to cross back up. There is resistance at 451 and 454 then 457 and 460 before 463.50 and 466 then 470. Support lower comes at 447 and 444 then 437.50 and 435.50 before 430. Short Term Uptrend.

SPY Weekly, $SPY

With the November Options Expiration in the books, equity markets showed strength with a tech and large caps printing a third weekly move to the upside and were now joined by the small caps. Elsewhere look for Gold to continue its short term move higher while Crude Oil its short term move to the down side. The US Dollar Index shifted to a pullback that looks to continue while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue its bounce in a downtrend as well while Emerging Markets consolidate.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the large caps and tech look strong, especially on the longer timeframe. On the shorter timeframe the QQQ is about to shift to an intermediate term trend higher and the SPY is not far behind. The IWM remains mired in consolidation despite a fabulous week for small caps. Use this information as you prepare for the coming week and trad’em well.

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