SPY Trends and Influencers December 28, 2019

• Posted by Greg Harmon
• on December 28th, 2019

Last week’s review of the macro market indicators saw heading into the shortened Christmas week, that equity markets looked very strong although the larger cap indexes were starting to get a bit extended. Elsewhere looked for Gold ($GLD) to consolidate under 1500 while Crude Oil ($USO) digested in the uptrend. The US Dollar Index ($DXY) looked to continue to the upside in broad consolidation while US Treasuries ($TLT) continued their pullback. The Shanghai Composite ($ASHR) looked to consolidate the recent move higher in a short term uptrend while Emerging Markets ($EEM) moved higher around long term resistance.

The Volatility Index ($VXXB) looked to remain very low making the path easier for equity markets to the upside. Their charts also looked strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY could use a reset on momentum measures as both were extended. If that happened it might be time for the $IWM to take the lead.

The week played out with Gold pushing to the upside and driving through that 1500 level while Crude Oil started another move higher. The US Dollar met resistance and pulled back by week’s end while Treasuries found support and bounced. The Shanghai Composite held between support and resistance while Emerging Markets continued to move higher.

Volatility held at very low levels all week with a slight uptick Friday. This allowed equities to continue unabated to the upside. The Indexes held in the first part of the week and then continued to the upside after Christmas, with the exception of the small caps. This resulted in the SPY and QQQ ending at all-time highs. The Russell 2000 fell Friday to end the week up slightly. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week a fraction off of the all-time high. It moved up Monday and then held there Tuesday. After Christmas it pushed higher again Thursday. It gapped up at the open Friday but could not hold up and ended slightly below the Thursday level. The daily chart shows price getting a bit extended from the 20 day SMA with the RSI overbought but not extreme. The MACD is flat and positive at levels where it has peaked in the past year. Perhaps a consolidation or digestion is in order.

The weekly chart shows the 5th positive week in row and 11th out of the last 12. It remains on target to the 330 breakout level, with 350 above that. The RSI is now overbought on this timeframe with the MACD rising and bullish. There is no resistance above 324. Support lower comes at 322 and 320 then 319 and 315.50 before 313.50. Possible Pause in Uptrend.

SPY Weekly, $SPY

With just 2 trading days left in the decade, equity markets are showing signs of tiring after a long run higher. Elsewhere look for Gold to continue its move higher while Crude Oil joins it on the path higher. The US Dollar Index looks to continue to the downside while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue to consolidate while Emerging Markets move higher over long term resistance.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe, but are starting to look extended on the shorter timeframe. Both the QQQ and SPY could use a reset on momentum measures and the IWM is already digesting its move. Use this information as you prepare for the coming week and trad’em well.

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