SPY Trends and Influencers May 16, 2020

• Posted by Greg Harmon
• on May 16th, 2020

Last week’s review of the macro market indicators saw heading into the May options expiration week, that equity markets showed great strength in the face of historically horrible economic data. Elsewhere looked for Gold ($GLD) consolidate at highs while Crude Oil ($USL) consolidated the short term move higher. The US Dollar Index ($DXY) continued to tighten the range while US Treasuries ($TLT) pulled back. The Shanghai Composite ($ASHR) continued to consolidate under resistance in a broad range while Emerging Markets ($EEM) consolidated under long term resistance. 

The Volatility Index ($VXX) looked to continue to move lower 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 were at potential resistance points and the $IWM with the easiest path higher.       

The week played out with Gold turning to the upside to a new 7½ year high while Crude Oil broke consolidation late in the week moving higher. The US Dollar held in a tight range at the top of consolidation while Treasuries found support Monday and reversed back higher. The Shanghai Composite met resistance and turned lower while Emerging Markets churned in a tight range all week.

Volatility rose up off of 2½ month lows but stalled quickly. This put pressure on equities and they responded with a 2 day move lower starting Tuesday. All found support by Thursday and reversed but finished the week lower. This resulted in the QQQ ending back near the 20 day SMA, the SPY at the lower edge of consolidation and the IWM at the falling 50 day SMA. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week back at the 61.8% retracement of the drop. It held there Monday and then pulled back Tuesday, ending on the low at the 20 day SMA. It continued lower Wednesday and early Thursday, nearly reaching the 50 day SMA, before reversing and closing up. Friday saw minor follow through to the upside but ended the week lower. The daily chart shows the RSI held again at the mid line and reversed while the MACD is moving sideways and positive.

The Bollinger Bands® continue to shrink as they move sideways. The weekly chart show the drop and then recovery to the 200 week SMA. The RSI is stalling at the mid line with the MACD at the edge of a cross up and negative. There is resistance at 287 and 291 then 294 and 297 before 300. Support under 285 comes at 281 and 279 then 275 and 273 before 270. Consolidation.

SPY Weekly, $SPY

With May options expiration in the record books, equity markets seem to have weathered a short term storm. Elsewhere look for Gold to continue to move higher while Crude Oil retraces its downward move. The US Dollar Index looks to possibly break to the upside while US Treasuries consolidate in their uptrend. The Shanghai Composite looks to slowly drift higher in consolidation while Emerging Markets pause under short term resistance.

The Volatility Index looks to remain elevated but moving lower making the path easier for equity markets to the upside. Their charts are a mixed bag, with the SPY and IWM in consolidation on the shorter timeframe while the QQQ looks to head higher. On the longer timeframe both the QQQ and SPY look strong as they move higher, but with resistance just overhead. The IWM is also at resistance but at relatively lower levels. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview May 15, 2020  

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus