SPY Trends and Influencers October 24, 2020

• Posted by Greg Harmon
• on October 24th, 2020

Last week’s review of the macro market indicators saw with the October options expiration in the books, equity markets showed they had lost a bit of energy as they approach the highs. Elsewhere looked for Gold ($GLD) to continue to consolidate in the uptrend while Crude Oil ($USL) consolidated in a broad range. The US Dollar Index ($DXY) continued in a short term move to the upside while US Treasuries ($TLT) consolidated at support. The Shanghai Composite ($ASHR) looked to consolidate as well while Emerging Markets ($EEM) moved higher.

The Volatility Index ($VXX) looked to remain stable at slightly elevated levels making the path slightly bumpy for equity markets. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY were weathering digestion for now with shallow pullbacks. The $IWM was looking strong as it was unwilling to yield any ground that it has gained since the September low.

The week played out with Gold failing on a break out attempt mid week and remaining in consolidation while Crude Oil remained in its broad range. The US Dollar recovery stalled and it drifted lower while Treasuries jumped broke support and settled into a trend lower. The Shanghai Composite fell back in consolidation while Emerging Markets held over support.

Volatility popped up early but held below breakout levels and stayed in a tight range. This put initial pressure on equities and they responded with a move lower. The index ETS’s diverged after the initial drop though. The SPY consolidated the rest of the week while the QQQ slowly drifted lower. The IWM however reversed to start moving back higher at the end of the week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back from a lower high. It had a hard drop Monday and then held there for the rest of the week, over the 20 day SMA. The daily chart shows the RSI is turning back up after a dip, in the bullish zone. The MACD is positive and flat, avoiding a cross down. The Bollinger Bands® are starting to squeeze in.

The weekly chart shows a Hanging Man candle following a Spinning Top. Both can be interpreted as possible reversal candles but more accurately as indecision. The RSI is holding in the bullish zone with the MACD flat and deep in bullish territory. There is support at 344.70 and 342.20 then 341 and 339.30 before 336 and 332. Resistance higher is at 346 and 348.50 then 353 and 357.50. Consolidation.

SPY Weekly, $SPY

With one week left before the election, equity markets are consolidating with minor retrenching. They are not showing signs of nervousness around the outcome. Elsewhere look for Gold to continue its pullback in the uptrend while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the downside while US Treasury prices are in a downtrend. The Shanghai Composite looks to continue to consolidate while Emerging Markets remain in an uptrend.

The Volatility Index looks to remain in moderate territory, neither helping nor hurting equity markets. Their charts are in consolidation on the shorter timeframe and pausing in the uptrends on the longer frame. On the shorter timeframe the IWM is holding up best with both the QQQ and SPY pulling back in bull flags. 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 October 23, 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