SPY Trends and Influencers June 13, 2020

• Posted by Greg Harmon
• on June 13th, 2020

Last week’s review of the macro market indicators saw that starting the month of June the equity markets showed renewed strength with significant moves higher. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USL) moved higher. The US Dollar Index ($DXY) continued to push to the downside while US Treasuries ($TLT) pulled back as well. The Shanghai Composite ($ASHR) looked to move higher in broad consolidation while Emerging Markets ($EEM) broke to the upside.  The

Volatility Index ($VXX) looked to continue to move lower putting a breeze at the back of the equity markets move to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe the $QQQ was also strong printing a new all-time high with the $SPY and the $IWM drawing up as well. All were getting a bit overheated and might pause in the short term though.

The week played out with Gold pushing to to a 1 month low before reversing and heading higher while Crude Oil consolidated over support until breaking down late in the week. The US Dollar found support at a symmetrical move to the downside and bounced while Treasuries also reversed after a Monday bottom. The Shanghai Composite topped and fell back to support while Emerging Markets fell back below the 200 day SMA.

Volatility ticked up early on and then accelerated to 7 week high late in the week. This put pressure on small caps and broad market equities early while tech stocks continued to all-time highs. But by Thursday all were moving lower at a rapid rate undoing a week or more of gains. This brought the SPY, IWM and QQQ back near the 20 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 moving higher and approaching an 88.6% retracement of the down leg. It inched closer Monday but that was as far as it got. It held there through Wednesday and then gapped down Thursday and drove lower with a bearish Marubozu at the 200 day SMA. Friday gapped up to open but could not hold up and fell back to finish the week at the 20 day SMA. The daily chart shows the RSI turning back up after a touch at the mid line with the MACD crossed down. Still in the bullish set up but with movement in the wrong direction.

The weekly chart printed a bearish engulfing candle signaling a potential top. This comes after a touch at the gap from February. The RSI is turning back lower at the mid line with the MACD rising and about to go positive. There is resistance above at 305.50 and 309.75 then 313.50 and 320. Support lower comes at 302.50 and 300 then 297 and 294 before 291. Pullback in Uptrend.

SPY Weekly, $SPY

Heading into the June options expiration week, equity markets showed some weakness with their turn lower at the end of the week following the FOMC meeting. Elsewhere look for Gold to consolidate in its uptrend while Crude Oil pauses in its move higher. The US Dollar Index looks to be ready to reverse to the upside while US Treasuries also may be reversing higher. The Shanghai Composite looks to continue to mark time moving sideways while Emerging Markets consolidate in their uptrend.

The Volatility Index looks to be reversing higher making the path harder for equity markets to the upside. Their charts look to have been punched in the face, especially on the shorter timeframe. All are holding over the 20 day SMA for now, so no major damage, but time to take notice. On the longer timeframe the long red bearish engulfing candles for both the IWM and SPY show some damage. The QQQ remains the strongest but with a potential reversal candle itself too. Use this information as you prepare for the coming week and trad’em well.

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