SPY Trends and Influencers March 16, 2024

Last week, the review of the macro market indicators saw heading into the March options expiration week, equity markets showed some fatigue. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) consolidated in a tighter range. The US Dollar Index ($DXY) looked better to the downside while US Treasuries ($TLT) bounced in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) moved up in consolidation.

The Volatility Index ($VXX) looked to remain very low and stable making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe, but with some indecision candles this week. On the shorter timeframe the $IWM, the $QQQ and the $SPY all ended with some short term weakness. This could signal a correction through price or time.

The week played out with Gold consolidating its surge higher in a bull flag while Crude Oil broke consolidation to the upside late in the week. The US Dollar found support and bounced but traded in a tight range while Treasuries made another lower high and fell back all week. The Shanghai Composite met resistance at its 200 day SMA and consolidated while Emerging Markets made a new 7 month high before dropping back. Volatility started the week higher but then fell back and jostled around to end the week little changed.

This put initial pressure on equities and they started the week with an intraday move lower. The SPY and QQQ found support and reversed with the SPY making a new all-time high Tuesday. They held Wednesday and then dropped back the rest of the week ending near the Monday lows. The IWM never reversed Monday and held through there Wednesday before also dropping at the end of the week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week seeing some profit taking on Friday after another record high on Thursday. It dropped again on Monday before reversing to a new all-time high on Tuesday. It held there Wednesday and Thursday before a gap down Friday touched the 20 day SMA for the first time since February 21 and then bounced. The RSI on the daily chart is at the lowest level in 2 months but remains in the bullish zone with the MACD crossed down but positive. The market showed the weakness it forecast last week.

The weekly chart shows a second doji indecision candle with a long upper shadow. This is often interpreted as a topping candle. The RSI is strong though in overbought territory and pulling back slightly with the MACD rolling over towards a cross down. There is resistance above at 510 and 513.50 then 517.50. Above that there is the 138.2% extension of the retracement of the 2022 pullback at 530 and the target for the Cup and Handle at 560. Support lower comes at 503.50 and 501.50 then 498.50 and 495 before 491.50. Uptrend with Short Term Weakness.

SPY Weekly, $SPY

With the March Quadruple Witching in the books and heading into the March FOMC meeting, equity markets showed some weakness after the long run higher. Elsewhere look for Gold to continue its uptrend while Crude Oil shows short term strength. The US Dollar Index continues in consolidation while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the short term move higher 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 SPY and QQQ charts look strong on the longer timeframe, perhaps building bull flags. On the shorter timeframe though both are showing some weakness as they reset momentum measures lower in the bullish range. The short term weakness in the IWM is threatening to turn into a failed break out. Use this information as you prepare for the coming week and trad’em well.

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