SPY Trends and Influencers May 18, 2024

Last week, the review of the macro market indicators saw heading into the May options expiration, equity markets showed renewed strength with a rebound from the pullback. Elsewhere looked for Gold ($GLD) to continue to pause in its uptrend while Crude Oil ($USO) consolidated in the pullback. The US Dollar Index ($DXY) continued to pullback in the 6 month uptrend while US Treasuries ($TLT) continued their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) flirted with a break out of a long channel to the upside.

The Volatility Index ($VXX) looked to remain very low and stable making the path easier for equity markets to the upside. The charts of the $SPY and $QQQ looked strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY continued to move up toward new highs as well. The $IWM looked good on the shorter timeframe but the longer timeframe continued to need more time.

The week played out with Gold pushing out of consolidation to new highs while Crude Oil continued to consolidate at support. The US Dollar continued to pull back while Treasuries moved up to to prior resistance in their downtrend. The Shanghai Composite moved to the top of the recent consolidation range while Emerging Markets rose to 2½ year highs.

Volatility dropped to 5 month lows, putting a tailwind behind equities and they responded by printing new all-time highs on the broad indexes. The SPY and QQQ made new all-time highs Thursday and held just below them Friday with the IWM back testing the high from the end of March. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week tiptoeing toward a retest of the all-time high. It held in place Monday before a small move higher Tuesday narrowly set a new high. It followed up with a break higher Wednesday to another new high and then held the move Thursday and Friday. The daily chart shows the Bollinger Bands® have opened higher with the RSI deep in the bullish zone and the MACD rising and positive.

The weekly chart shows a 4th week moving higher off the 20 week SMA with the Bollinger Bands open higher as well. The RSI is strong in the bullish zone with the MACD curling to cross up after resetting lower. There is resistance at 530 and a target for the Cup and Handle break to 560 above that. A Measured Move gives a target to 610 above that. There is support at 524.50 and 520.50 then 517.50 and 513.50 before 510 and 503.50. Uptrend.

SPY Weekly, $SPY

With the May options expiry in the books, equity markets showed renewed strength moving to new all-time highs. Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates in a pullback. The US Dollar Index continues to pullback in its short term uptrend while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets build a short term uptrend.

The Volatility Index looks to remain very low and stable 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 are now consolidating moves to new all-time highs with the IWM closing in on 2½ year highs. Use this information as you prepare for the coming week and trad’em well.

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