SPY Trends and Influencers April 25, 2020

• Posted by Greg Harmon
• on April 25th, 2020

Last week’s review of the macro market indicators saw with the April options expiration complete, equity markets continued to show signs of recovery. Elsewhere looked for Gold ($GLD) to continue its pullback in the uptrend while Crude Oil ($USO) consolidated in the down trend. The US Dollar Index ($DXY) continued to tighten its range while US Treasuries ($TLT) consolidated in their uptrend.

The Shanghai Composite ($ASHR) remained in broad consolidation while Emerging Markets ($EEM) continued their short term move higher.  The Volatility Index ($VXX) looked to continue to drift lower but at a high level making the path easier for equity markets to the upside. Their charts showed the $SPY and $QQQ taking advantage of that and moving higher, showing strength especially on the longer timeframe. The $IWM however looked like it needed to catch its breath and was pausing.                    

The week played out with Gold finding support and reversing to the upside while Crude Oil dropped to 20 year lows before turning slightly higher. The US Dollar continued to drift higher while Treasuries gave up an early lift but ended the week higher. The Shanghai Composite and Emerging Markets traded in a narrow range all week near resistance.  Volatility had a small bounce early in the week but fell back to end little changed.

This continues to put 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 slightly lower. This resulted in the SPY sticking near the 50% retracement of the drop. The QQQ is leading and has retraced 61.8% while the IWM continues to lag having only retraced 38.2%. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at the 50 day SMA and over a 50% retracement of the drop. It held there Monday, but then gapped down Tuesday giving up the 50% level. It moved higher in small steps the rest of the week, filling the gap, regaining the 50% level and closing over the 50 day SMA. The daily chart shows the RSI moving up short term towards another try at turning bullish. The MACD is flat but positive.

The weekly chart shows the stall at the 200 week SMA. The RSI has stalled at the mid line with the MACD rising but negative. There is resistance at 285 and 287 then 291 and 294 before 297 and 300. Support lower comes at 281 and 275 then 273 and 270 before 265.50. Consolidation in Uptrend.

SPY Weekly, $SPY

Heading into the last week of April, equity markets showed resilience holding up in the face of a massive move in Crude Oil. Elsewhere look for Gold to continue higher while Crude Oil may be pausing in the downtrend. The US Dollar Index continues to tighten its consolidation while US Treasuries remain in an uptrend. The Shanghai Composite looks to continue in broad consolidation while Emerging Markets pause in their short term uptrend.

The Volatility Index looks to remain elevated but continuing to move lower, making the path easier for equity markets to the upside. Their charts have hit the pause button on the shorter timeframe. On the longer timeframe the QQQ remains the strongest and has erased more of the drop than the SPY and IWM even less. All 3 are stalled at key retracement levels with the QQQ at a 61.8% retracement, the SPY 50%, and the IWM 38.2%. Use this information as you prepare for the coming week and trad’em well.

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