SPY Trends and Influencers July 13, 2024

Last week, the review of the macro market indicators saw with the first week of July in the books, equity markets showed strength from the large cap and tech focused S&P 500 and Nasdaq 100, but continued churn from the small caps. Elsewhere looked for Gold ($GLD) to continue its consolidation in the uptrend while Crude Oil ($USO) consolidated in a tightening range. The US Dollar Index ($DXY) continued to drift to the downside in consolidation while US Treasuries ($TLT) moved lower in their downtrend.

The Shanghai Composite ($ASHR) looked to continue the short term move lower while Emerging Markets ($EEM) remained in broad consolidation. 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 reset momentum measures and both were also looking strong upon reversing. The $IWM continued to be dead money, now for 30 months.

The week played out with Gold breaking consolidation to the upside with a new all-time high while Crude Oil continued to hold in a tight range. The US Dollar continued lower to 3 month lows while Treasuries bounced in the downtrend. The Shanghai Composite held at rising trend support and moved higher while Emerging Markets rose to a nearly 2½ year high.

Volatility continued to hold shy of the teens ending the week near the lows of the year. This made for a supportive backdrop for equities and the large cap S&P 500 and Nasdaq 100 started the week with 3 back to back new all-time highs. They pulled back Thursday and then reversed to finish the week Friday. The big news was the small cap Russell 2000 finally waking up and pressing to 2½ year highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after 3 straight all-time highs to end the prior week. It continued with 3 more to start the week, ending Wednesday at the 161.8% extension of the drawdown of 2022 and the Cup and Handle on the weekly chart. This brought price above the Bollinger Bands®. It pulled back Thursday, moving inside the BB’s, and then reversed Friday to close the week with an inside candle on the daily chart. The RSI is rising on the edge of overbought with the MACD positive and moving higher.

The weekly chart shows a second strong week moving higher with the price outside of the Bollinger Bands. The RSI is strong and overbought with the MACD rising and bullish. There is resistance at 561.50 and now a Measured Move to 610 and the 200% extension of the retracement of the 2022 drop at 613 above. Support lower is at 556.50 and 549.50 then 545.75 and 542 before 540 and 537. Uptrend.

SPY Weekly, $SPY

Heading into July Options Expiration week, equity markets showed early strength give way to rotation from large cap and tech names into small caps late in the week. Elsewhere look for Gold to continue consolidation in the uptrend or break to new highs while Crude Oil consolidates in a tightening range. The US Dollar Index continues to drift to the downside in consolidation while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the move lower in consolidation while Emerging Markets have broken consolidation to begin an uptrend.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts also look strong, especially the SPY on the longer timeframe. On the shorter timeframe both the QQQ and SPY could us a reset on momentum measures as both are extended. But the story of the week is the IWM joining the party after a 2½ year nap. Use this information as you prepare for the coming week and trad’em well.

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