SPY Trends and Influencers April 23, 2022

• Posted by Greg Harmon
• on April 23rd, 2022

Last week’s review of the macro market indicators saw with April Options Expiration in the books, equity markets showed more weakness. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) pulled back in its uptrend. The US Dollar Index ($DXY) continued to move to the upside while US Treasuries ($TLT) continued to trend lower. The Shanghai Composite ($ASHR) looked to continue a short term trend lower while Emerging Markets ($EEM) resumed their downtrend.

The Volatility Index ($VXX) was slightly elevated making the path moderately more difficult for equity markets to the upside. The charts of the large cap Indexes were showing more weakness on both timeframes. On the shorter timeframe the $SPY was in a slightly stronger position than the $QQQ. The $IWM was showing relative strength consolidating in the lower range.

The week played out with Gold getting knocked back after a touch at $2000 while Crude Oil consolidated over $100 per barrel. The US Dollar continued to march higher while Treasuries consolidated the fast move lower. The Shanghai Composite fell back to test the March low while Emerging Markets are not far behind as they approach the March low as well.

Volatility remained elevated but stayed in a narrow range, down early and up late in the week. This removed pressure on equities early and they responded by starting the week with a 3 day move higher. All reversed Thursday following Fed Chairman comments on the speed of rate hikes and moved sharply lower through Friday. This resulted in the SPY and QQQ ending at one month lows with the IWM continuing in its lower range. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in short term consolidation in a downtrend. It held support after a gap down Monday and rose to the top of consolidation Tuesday. It gapped higher to start Wednesday as well but could not hold the break. Thursday it opened higher again, touching the 200 day SMA, before 2 very bearish days moving lower and ending at a 5 week low. The RSI on the daily chart is back into the bearish zone and dropping with the MACD negative and falling. Price is well outside of the Bollinger Bands® on this timeframe which may warrant a short term bounce.

The weekly chart printed a third weekly candle lower and below the 50 week SMA. The RSI on this timeframe is falling back to the edge of the bearish zone with the MACD negative and turning back lower. There is support lower at 425.50 and 423 then 420 and 417.40 before 413.75 and 411 then 407.25 and 405.50. Resistance higher sits at 428.50 and 430.50 then 435.50 and 437.50 before 441 and 444.  Intermediate Downtrend.

SPY Weekly, $SPY

With 1st Quarter earnings reports starting to pick up, equity markets are starting to turn ugly. Elsewhere look for Gold to consolidate in its uptrend while Crude Oil consolidates its move higher. The US Dollar Index continues to trend to the upside while US Treasuries trend lower. The Shanghai Composite looks to continue to move lower along with Emerging Markets.

The Volatility Index looks to remain elevated and possibly moving higher still making the path harder for equity markets to the upside. Their charts look weak, especially on the shorter timeframe with the SPY, IWM and QQQ all closing at 5 week lows after two consecutive days of large moves lower. On the longer timeframe both the QQQ and SPY are also starting to look like the path lower is the easier route, while the IWM remains in the lower range. Use this information as you prepare for the coming week and trad’em well.

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