SPY Trends and Influencers April 16, 2022

Last week’s review of the macro market indicators saw heading into April options expiration and the short pre-Easter week, equity markets had lost their strength. Elsewhere looked for Gold ($GLD) to consolidate while Crude Oil ($USO) pulled back in the uptrend. The US Dollar Index ($DXY) continued to drive to the upside while US Treasuries ($TLT) drove lower in a downtrend. The Shanghai Composite ($ASHR) looked to consolidate while Emerging Markets ($EEM) continued to move lower.

The Volatility Index ($VXX) looked to remain in the normal range making the path easier for equity markets to the upside. Their charts looked weak though, especially on the longer timeframe. On the shorter timeframe the $IWM, the $QQQ and the $SPY also looked to have an easier path lower.

The week played out with Gold pushing out of consolidation to the upside while Crude Oil turned back higher. The US Dollar slowed in it’s move higher while Treasuries continued to move lower. The Shanghai Composite continued to hold over support while Emerging Markets continued the move lower.

Volatility moved slightly higher. This put increased pressure on equities and the large caps responded by starting the week with a 2 day move lower. They found support by Wednesday and reversed but fell back Thursday to finish the week lower. The small caps had a much better Friday and finished the week slightly higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week holding at the 20 and 200 day SMA’s after a pullback. It gapped down Monday and continued lower. There was hope Tuesday after a gap up at the open, but it could not hold and fell back to a lower close. Wednesday saw a reversal of that drop but then Thursday reversed back lower to end the week and the day at the low. The daily chart shows this happening near the lower of the Bollinger Bands® and around the 50 day SMA. The RSI is dropping through the midline with the MACD also dropping but still positive.

The weekly chart shows continuation lower after the Shooting Star 2 weeks ago, now below the 50 week SMA. The RSI is turning back from the midline with the MACD curling back down avoiding a move to positive. There is support lower at 437.50 and 435.50 then 430.50 and 428.50 then 425.50 and 423 before 420. Resistance comes at 441 and 444 then 447 and 451 before 454 and 457 then 460. Intermediate Downtrend.

SPY Weekly, $SPY

With April Options Expiration in the books, equity markets showed more weakness. Elsewhere look for Gold to continue its uptrend while Crude Oil pulls back in its uptrend. The US Dollar Index continues to move to the upside while US Treasuries continue to trend lower. The Shanghai Composite looks to continue a short term trend lower while Emerging Markets resume their downtrend.

The Volatility Index is slightly elevated making the path moderately more difficult for equity markets to the upside. The charts of the large cap Indexes are showing more weakness on both timeframes. On the shorter timeframe both the SPY is in a slightly stronger position than the QQQ. The IWM is showing relative strength consolidating in the lower range. Use this information as you prepare for the coming week and trad’em well.

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