SPY Trends and Influencers April 11, 2020

• Posted by Greg Harmon
• on April 11th, 2020

Last week’s review of the macro market indicators saw a week with record unemployment filings and a non-farm payroll report that ended a 10 year streak of adding jobs. Despite that equity markets showed resilience on the mid to large cap side, not so much for the small caps. Elsewhere looked for Gold ($GLD) to continue to move higher while Crude Oil ($USO) reversed to the upside to join it. The US Dollar Index ($DXY) was also moving to the upside while US Treasuries ($TLT) pushed back towards all-time highs.

The Shanghai Composite ($ASHR) looked to consolidate in a broad range while Emerging Markets ($EEM) headed lower.  The Volatility Index ($VXXY) was settling back lower but remained at very high levels, keeping the pressure on equity markets. Their charts all reversed from the bounce last week with the $IWM showing the weakest performance, renewing the downtrend. The $SPY and $QQQ moved lower but both had their narrowest range since before the drop began in mid-February, perhaps showing signs of growing clarity.                 

The week played out with Gold finding support and then rising rapidly while Crude Oil had a small bounce that failed before pushing higher at the end of the week. The US Dollar bounce ended and it dropped to the recent lows while Treasuries held at their lows. The Shanghai Composite finally found a bottom and bounced into the Lunar New Year while Emerging Markets reversed higher.

Volatility moved lower all week taking pressure off of equity markets. And the Equity Index ETF’s responded with strong moves to the upside. The SPY, IWM and QQQ moved higher each day adding to the win streak with the SPY and IWM recovering more than 61.8% of the drop while the QQQ was stronger recovering over 78.6% of its move down. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week following a set back and holding below the 20 day SMA. Monday it gapped over the 20 day SMA though, establishing a higher low, ending at a 38.2% retracement of the drop from the high. It rose again Tuesday but could not hold the gain but then retraced that move Wednesday. Thursday it continued higher, touching a 50% retracement before settling slightly lower.

The daily chart shows the thrust Friday ending with a doji but also opening the Bollinger Bands®. The RSI is rising and now through the mid line with the MACD moving higher but still negative. Green Shoots and a good start. The weekly chart shows the strong move higher after a retrenching week. 

Price is nearly back to the 100 week SMA. The RSI is rising and nearing the mid line with the MACD turning to reverse higher from an extreme low. There is resistance above at 281 and 285 then 287 and 291 before 294 and 297 then 300. Support lower comes at 275 and 273 then 270 and 263.50 followed by 260 and 256. Short Term Uptrend.

SPY Weekly, $SPY

Heading into Easter and April options expiration week, equity markets are showing strong moves higher. Elsewhere look for Gold to continue its thrust higher while Crude Oil moves lower in broad consolidation. The US Dollar Index continues to move lower short term while US Treasuries pullback in their uptrend. The Shanghai Composite looks to continue in broad consolidation while Emerging Markets move higher.

The Volatility Index looks to remain high but moving lower making the path easier for equity markets to the upside. Their charts look strong, especially on the shorter timeframe. On the longer timeframe the IWM, QQQ and SPY could be starting reversal moves but it is early to call. Use this information as you prepare for the coming week and trad’em well.

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