SPY Trends and Influencers September 29, 2018

Last week’s review of the macro market indicators noted heading into the last week of the 3rd quarter, equity strength had rotated from the small cap and tech names into the large caps of the Dow Jones Industrials and the S&P 500. The leaders were making new all-time highs as the laggards held steady, a strong market. Elsewhere looked for Gold ($GLD) to consolidate in its downtrend while Crude Oil ($USO) slowly moved higher. The US Dollar Index ($DXY) looked to continue to the downside slowly while US Treasuries ($TLT) were at the bottom of consolidation and look better lower.

The Shanghai Composite ($ASHR) was bouncing off a retest of the lows but not safe yet and Emerging Markets ($EEM) were bouncing in their downtrend as well. Volatility ($VXX) looked to remain very low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY was now leading the way on the shorter timeframe with the QQQ and IWM consolidating, while all looked fantastic on the longer timeframe.

The week played out with Gold breaking consolidation to the downside only to find a bid and recover back while Crude Oil drifted until a strong move up at the end of the week. The US Dollar found support and bounced and Treasuries also caught a bid and pushed back up in broad consolidation. The Shanghai Composite drove higher all week while Emerging Markets stalled in their bounce.

Volatility held in a tight range south of being a teenager, keeping the bias higher for equities. The Equity Index ETF’s had a mixed week though with some rotation back to the tech heavy QQQ at the expense of the SPY which held firm. The IWM continued its path lower toward the 100 day SMA. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY had pulled back slightly after printing a new all-time high coming into the week. It dropped further Monday, and drifted slightly lower through Wednesday, touching the 20 day SMA. It held there Thursday and Friday, ending slightly lower on the week.

It is less than 4 points from the all-time high. The daily chart shows the Bollinger Bands® have shifted to sideways, while the RSI is holding over the mid line. The MACD is drifting lower but positive. A consolidative picture, not weakness on this timeframe.

The weekly frame shows the price action flattening. The RSI on this timeframe is strong in the bullish zone with the MACD leveling and positive. There is resistance at 291 and 294 above. Support lower comes at 290 and 287.50 then 286 and 284. Possible Pause in Uptrend.

SPY Weekly, $SPY

As the books are closed on the 3rd Quarter, the equity markets are taking a breather after making recent new highs. Elsewhere look for Gold to continue lower in its downtrend while Crude Oil drives higher. The US Dollar Index may be ready to reverse higher while US Treasuries have bounced again at support and are now rising. The Shanghai Composite is also building a possible reversal higher while Emerging Markets continue to fall in a channel.

Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show digestive behavior, with sideways or slight pullbacks on the longer timeframe. On the shorter timeframe there has been continued rotation, now into the QQQ as the SPY pauses with the IWM still lagging. Use this information as you prepare for the coming week and trad’em well.

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