SPY Trends and Influencers June 6, 2020

Last week’s review of the macro market indicators saw the month of May was in the books, and equity markets had renewed their trends higher. Elsewhere looked for Gold ($GLD) to consolidate in its uptrend while Crude Oil ($USL) might be resuming its uptrend. The US Dollar Index ($DXY) was starting to move lower while US Treasuries ($TLT) consolidated. The Shanghai Composite ($ASHR) looked to continue the broad drift sideways while Emerging Markets ($EEM) consolidated in their uptrend. 

The Volatility Index ($VXX) looked to continue to drift lower making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe the $QQQ was breaking out of consolidation with the $SPY pushing higher and the $IWM consolidating the range break over support.

The week played out with Gold pushing up to resistance but quickly dropping back to new lows while Crude Oil confirmed its strength and moved higher. The US Dollar continued to pullback while Treasuries broke consolidation to the downside ending at 10 week lows. The Shanghai Composite broke out of consolidation and started to move higher while Emerging Markets also broke resistance and headed to 3 month highs.

Volatility continued to drift lower, ending at levels not seen since February. This created a positive environment for equities and they responded by moving higher. The SPY had a strong trend up level Thursday and then explode Friday. The QQQ was a bit choppier, pulling back Thursday before making new all-time highs. The IWM did a stair step higher all week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in a short term consolidation in an uptrend over the 200 day SMA. It started higher Monday and continued through Wednesday. It took a breather Thursday before a strong move higher Friday to close the week. This brought it above the 78.6% retracement of the move lower and near the gap down from February. The daily chart shows the RSI is now moving into overbought territory with the MACD rising and positive. The Bollinger Bands® are also running higher.

The weekly chart shows a strong candle moving higher. The RSI is at the edge of a move into the bullish zone with the MACD rising and close to turning positive. There is resistance at 320 and 325.25 then 332 and 339. Support lower comes at 313.50 and 309.75 then 305.50 and 302.50 before 300. Uptrend.

SPY Weekly, $SPY

Starting the month of June the equity markets showed renewed strength with significant moves higher. Elsewhere look for Gold to continue its pullback while Crude Oil moves higher. The US Dollar Index continues to push to the downside while US Treasuries pullback as well. The Shanghai Composite looks to move higher in broad consolidation while Emerging Markets break to the upside.

The Volatility Index looks to continue to move lower putting a breeze at the back of the equity markets move to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe the QQQ is also strong printing a new all-time high with the SPY and the IWM drawing up as well. All are getting a bit overheated and may pause in the short term though. Use this information as you prepare for the coming week and trad’em well.

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