SPY Trends and Influencers April 18, 2020

Last week’s review of the macro market indicators saw heading into Easter and April options expiration week, equity markets were showing strong moves higher. Elsewhere looked for Gold ($GLD) to continue its thrust higher while Crude Oil ($USO) moved lower in broad consolidation. The US Dollar Index ($DXY) continued to move lower short term while US Treasuries ($TLT) pulled back in their uptrend.

The Shanghai Composite ($ASHR) looked to continue in broad consolidation while Emerging Markets ($EEM) moved higher.  The Volatility Index ($VXXY) looked to remain high but moving lower making the path easier for equity markets to the upside. Their charts looked strong, especially on the shorter timeframe. On the longer timeframe the $IWM, $QQQ and $SPY could be starting reversal moves but it was too early to call.                       

The week played out with Gold pushing to the upside but quickly meeting resistance and dropping back to finish the week lower while Crude Oil continued to drop, reaching 20 year lows. The US Dollar found support and managed a minor bounce while Treasuries caught a bid and moved to a higher high. The Shanghai Composite continued in consolidation while Emerging Markets paused before moving higher again the back half of the week.

Volatility continued to drift lower at a slower pace, ending the week under support. This allowed equities to stabilize and then move higher later in the week. The QQQ led the way as it turned positive on the year. The SPY reconnected with its 50 day SMA for the first time since the start of the February drop. The IWM remains the laggard but with an upward trajectory. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week having retraced 50% of the drop and moving higher. Monday saw it hold at the high and then it tried to move higher Tuesday. It fell back in two very narrow range days for recent times, holding at that 50% level. Friday saw a gap up and it finished the week over the 50 day SMA. This was the first time it was over that since start of the drop in February.

The daily chart shows the price continuing to move up the Bollinger Bands®. The RSI is rising and just short of a move into the bullish zone over 60. The MACD is also moving higher but this has turned positive. There is also a confluence of SMA’s developing at 300. Perhaps that will be the ultimate resistance.

The weekly chart shows a strong “V” shaped recovery now at the 200 week SMA. The RSI is rising but not quite at the mid line yet with the MACD turned back higher but still at an extreme low. There is resistance above at 287 and 291 then 294 and 297 before 300. Support lower comes at 285 and 281 then 275 and 273 before 270. Uptrend.

SPY Weekly, $SPY

With the April options expiration complete, equity markets continue to show signs of recovery. Elsewhere look for Gold to continue its pullback in the uptrend while Crude Oil consolidates in the down trend. The US Dollar Index continues to tighten its range while US Treasuries consolidate in their uptrend. The Shanghai Composite remains in broad consolidation while Emerging Markets continue their short term move higher.

The Volatility Index looks to continue to drift lower but at a high level making the path easier for equity markets to the upside. Their charts show the SPY and QQQ taking advantage of that and moving higher, showing strength especially on the longer timeframe. The IWM however looks like it needs to catch its breath and is pausing. Use this information as you prepare for the coming week and trad’em well.

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