SPY Trends and Influencers April 6, 2024

Last week, the review of the macro market indicators saw with the First Quarter of the year in the books, equity markets exhibited strength. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) built on its move higher. The US Dollar Index ($DXY) continued to drift to the upside in consolidation while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to reverse the short term uptrend while Emerging Markets ($EEM) consolidated in a broad range.

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 the $SPY on both timeframes. The $QQQ was showing some momentum divergence that could lead to more consolidation or a pullback while the $IWM looked to step up as it broke to 2 year highs.

The week played out with Gold continuing to the upside, printing 4 new all-time highs and ending the week at one while Crude Oil also continued higher making 5 month highs. The US Dollar met resistance and then held in a tight range while Treasuries continued to flirt with a new move lower. The Shanghai Composite jumped to resistance and held there through Wednesday before closing for the week while Emerging Markets are threatening to break the rising channel to the downside.

Volatility rose to 5 month highs and held there Friday. This put pressure on equities mid week and they responded with a move lower. The SPY joined the QQQ pulling back from recent tops with the IWM looking like a possible failed break out. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just pennies off the all-time high it set the day before. It held there Monday but then gapped down Tuesday to the 20 day SMA. It held there Wednesday and then opened higher in the typical bounce Thursday back at the all-time high. But that did not hold up as 4 Fed Presidents delivered the message that rate hikes will be delayed. It fell back and printed a bearish engulfing Marubozu candle, a potential reversal. Friday, however, did not deliver another move lower, but instead an inside day to the upside had it close back over the 20 day SMA. The RSI is moving back higher after a touch at the midline with the MACD leveling and positive.

The weekly chart, however, printed a bearish engulfing candle. This comes with the RSI overbought but now pulling back and the MACD starting to roll over after a 6 month move higher. The Bollinger Bands® do continue to point higher though. There is resistance at 520.50 and 524.50 with the 138.2% extension of the retracement of the 2022 pullback at 530 then the Cup and Handle target at 560. Support lower is at 517.50 and 513.50 then 510 and 503.50 before 501.50 and 498.50. Uptrend.

SPY Weekly, $SPY

With the first week of April in the books, equity markets are looking in need of a rest. Elsewhere look for Gold to continue its record run higher while Crude Oil continues its move to the upside as well. The US Dollar Index continues to short term trend to the upside while US Treasuries may resume their downtrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets consolidate under long term resistance.

The Volatility Index looks to remain low making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe. On the shorter timeframe the QQQ is at risk for some downside with the IWM in a messy short term uptrend and the SPY the strongest but also seeing some profit taking show up. Use this information as you prepare for the coming week and trad’em well.

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