SPY Trends and Influencers April 2, 2022

• Posted by Greg Harmon
• on April 2nd, 2022

Last week’s review of the macro market indicators saw heading into the last week of the 1st Quarter, equity markets showed some strength in the face of increasing expectations for Fed moves and aggressiveness as well as continued war in Ukraine. Elsewhere looked for Gold ($GLD) to continue its move higher while Crude Oil ($USO) also rebounded to the upside. The US Dollar Index ($DXY) continued to drift to the upside while US Treasuries ($TLT) pulled back in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term move lower while Emerging Markets ($EEM) resumed the downtrend.

The Volatility Index ($VXX) had made a return to normal levels making the path easier for equity markets to the upside. The charts of the $SPY and $QQQ looked strong, especially on the longer timeframe. On the shorter timeframe both were close to confirming reversals to the upside. The $IWM remained in its old pattern of consolidation, just in a lower range.

The week played out with Gold moving lower but trading in a tight range over support while Crude Oil rolled lower from a lower high. The US Dollar stalled and held within the range of the recent flag while Treasuries bounced from the 52 week low. The Shanghai Composite found support and reversed to end at a higher high while Emerging Markets held in a tight range over long term support.

Volatility dipped into the teens before a rebound, but closed under 20 in a narrow range week. This continued to allow equities to run higher early in the week, but they all topped Tuesday and reversed the rest of the week. This resulted in the SPY, the IWM and the QQQ ending higher but little changed for 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 moving higher and having retraced about 61.8% of the drop from the high. It continued higher Monday and then gapped up Tuesday to make its first higher high in 2022. Unfortunately, it spent the rest of the week closing the gap and moving lower. Friday printed a Hammer candle though, so look for possible confirmation of a reversal back higher with a move up Monday. The daily chart shows the RSI holding in the bullish zone with the MACD leveling and strong.

The weekly chart shows price knocked back lower at the 200% extension of the retracement of the pandemic drop, with a possible Shooting Star reversal candle. The RSI on this timeframe is leveling over the midline with the MACD about to cross up and move to positive. There is resistance at 454 and 457 then 460 and 463.50 before 466 and 470. Support lower comes at 451 and 447 then 444 and 441 before 437.50. Pullback in Short Term Uptrend.

SPY Weekly, $SPY

With the first Quarter of 2022 in the books, equity markets saw some profit taking after a strong move higher. Elsewhere look for Gold to consolidate in its uptrend while Crude Oil pulls back in its trend higher. The US Dollar Index looks to consolidate its move higher while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue the consolidation while Emerging Markets bounce in their downtrend.

The Volatility Index is back in the normal zone making the path easier for equity markets to the upside. Their charts saw some late week profit taking on the short term frame, showing no real damage to the recent trends higher. On the longer timeframe that profit taking takes the form of a possible top in the rally for the QQQ and SPY. As usual, the IWM continues to move sideways, in its lower range. Use this information as you prepare for the coming week and trad’em well.

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