SPY Trends and Influencers August 31, 2024

Last week, the review of the macro market indicators saw with the Fed Jackson Hole meeting in the rear view mirror, that equity markets continued their progress higher, shifting from the large caps and tech names to small caps Friday, but without a rotation this time. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) consolidated in a narrow range and at risk for a drop. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue the downtrend while Emerging Markets ($EEM) were prepped to start a new uptrend.

The Volatility Index ($VXX) looked to remain low and stabilizing making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe, with the $IWM joining the $SPY and $QQQ in that view. On the shorter timeframe both the QQQ and SPY were slowing down and watching the short term money flow into the IWM.

The week played out with Gold continuing to make new all-time highs but moving more slowly while Crude Oil held at the bottom of the tightening range and bounced. The US Dollar found support at a retest of the year end low and bounced while Treasuries continued building a bull flag under resistance. The Shanghai Composite continued the downtrend to a nearly 7 month low while Emerging Markets consolidated in a tight range.

The Volatility Index continued to stabilize at low levels. This relieves pressure on equities, but despite this they held in a narrow range all week in light late summer trading. This resulted in the SPY ending near all-time highs with the QQQ and IWM holding short of their recent highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week holding in consolidation on the daily chart over the August 1 top. This was after a fast move higher, recovering the 3 day nearly 10% drop at the start of the month. It continued to hold there all week, just shy of the all-time high and at the 161.8% extension of the retracement of the 2022 drop. The RSI is back in the bullish zone and flat with the MACD positive and going flat. The Bollinger Bands® are open higher to allow for the consolidation to work higher as if it were a bull flag.

The weekly chart shows price holding after a 3 week recovery to the prior high. The RSI is stalling short of the prior tops and a move into overbought territory while the MACD is positive and trying to cross back up. The Bollinger Bands are open higher on this chart as well. There is resistance at 565.50 then a Measured Move to 580 above. Support lower sits at 561.50 before 556.50 and 549.50 then 545.75 and 542 before 540 and 537. Uptrend.

SPY Weekly, $SPY

Heading into the unofficial end of summer and with August in the books, equity markets showed a preference for some rest after the 3 week move higher. Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates in a tightening range. The US Dollar Index continues to bounce to the upside while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the downtrend while Emerging Markets consolidate over support in a possible start of a new uptrend.

The Volatility Index looks to remain 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 the week long consolidation left the SPY with just 2 hours to rocket to just shy of a new all-time high close while the QQQ and the IWM ended near the high of the week. All are prepped to start September stronger. Use this information as you prepare for the coming week and trad’em well.

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