SPY Trends and Influencers December 7, 2019

• Posted by Greg Harmon
• on December 7th, 2019

Last week’s review of the macro market indicators saw with one month left in the decade, equity markets continued to show strength. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) remained in broad consolidation. The US Dollar Index ($DXY) looked to continue to drift to the upside while US Treasuries ($TLT) continued to channel lower.

The Shanghai Composite ($ASHR) looked to drift lower as well with Emerging Markets ($EEM) in broad consolidation.  Volatility ($VXXB) looked to remain very low keeping the bias to upside for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ looked to continue to print new all-time highs while the IWM had joined the uptrend and looked to start to play catch up.

The week played out with Gold pushing to the upside but quickly meeting resistance and dropping back while Crude Oil consolidated but saw late strength try to move it higher Friday. The US Dollar found support on a pullback and bounced while Treasuries jumped early but fell back later in the week to end lower. The Shanghai Composite found support and started higher while Emerging Markets also found support and rose the back half of the week.

Volatility rose up off of 52 week lows but fell back mid week to end little changed. This put initial pressure on equities and they responded by starting the week with a 2 day move lower. All found support by Wednesday and reversed to finish the week little changed. This resulted in the SPY and QQQ ending back near all-time highs with the IWM continuing its break higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY had pulled back slightly from a new all-time high as it entered the week. It took a plunge Monday, printing a near Marubozu candle, closing the gap from the prior week. It then gapped down Tuesday, below the 20 day SMA for the first time since early October.

It ended the day with a Hammer reversal candle though and confirmed the reversal Wednesday. It then continued higher the rest of the week, ending back at the high. The daily chart shows the RSI reset lower in the bullish zone and is now rising. The MACD is leveling after a minor pullback. The Bollinger Bands® have flattened.

The weekly chart shows a Hanging Man candle, a possible reversal if confirmed next week. The RSI continues to move higher though in the bullish zone with the MACD rising and bullish. There is resistance at 315.50 and a target on the ascending triangle break to 330 above that. Support lower comes at 314.30 ad 313.50 then 310 and 307.50 before 304.50. Uptrend.

SPY Weekly, $SPY

With the first week of December in the books, equity markets showed resilience with a rebound from an ugly start. Elsewhere look for Gold to continue its pullback while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the upside while US Treasuries pullback in their uptrend. The Shanghai Composite looks to continue the slow drift lower while Emerging Markets consolidate under long term resistance.

Volatility looks to remain low but off of the extreme lows keeping the bias to the upside for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ both rebounded to end back near all-time highs. But it is the IWM stealing the show as it looks to take over leadership with a break above 11 month resistance. Use this information as you prepare for the coming week and trad’em well.

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