SPY Trends and Influencers April 24, 2021

Last week’s review of the macro market indicators saw with April options expiration in the books, large cap equity markets continued to show strength moving to all-time highs, with the small caps lagging behind in consolidation. Elsewhere looked for Gold ($GLD) to continue its reversal higher while Crude Oil ($USL) moved out of consolidates to the upside. The US Dollar Index ($DXY) continued to pullback in its short term move higher while US Treasuries ($TLT) were rebounding in their downtrend.

The Shanghai Composite ($ASHR) looked to pause in its move higher while Emerging Markets ($EEM) consolidated the pullback in their uptrend over long term support. The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts looked strong on the longer timeframe, especially the large caps. On the shorter timeframe both the $QQQ and $SPY were driving higher in strong fashion, while the $IWM consolidated just under the highs.

The week played out with Gold pushing to the upside but quickly meeting resistance and dropping back while Crude Oil also stalled and fell back. The US Dollar found support in the pullback while Treasuries bounced up to last week’s highs and paused. The Shanghai Composite moved back over resistance and to the prior highs before resting while Emerging Markets held in consolidation under resistance.

Volatility rose up off of 52 week lows but remained under the levels of the COVID period. This put pressure on equities early in the week and they responded by moving lower into mid-week. All found support by Wednesday and the SPY and the IWM reversed to finish the week little changed. The QQQ held in a range at slightly lower levels. This resulted in the SPY back near all-time highs and QQQ ending slightly off the all-time highs with the IWM continuing in consolidation. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at an all-time high, but also having printed a doji star candle. It had a down day Monday, confirming an Evening Star reversal. It continued lower Tuesday, retouching the 161.8% extension of the retracement of the COVID drop, and found support. It alternated wider range days the rest of the week, closing Friday just short of a new all-time high, after end of day profit taking.

The full price action on the daily chart for the week looks like a flat consolidation. The RSI is trying to move back higher after a reset lower out of overbought territory. The MACD pulled back to touch the signal line but did not cross down. The Bollinger Bands® are starting to squeeze in as price moves back closer to the 20 day SMA.

The weekly chart shows a long lower shadow on this week’s candle, moving back closer to inside the Bollinger Bands. The RSI is turning flat as it creeps into overbought territory while the MACD is moving back higher. There is no resistance above 417.60, but the 200% extension of the COVID drop at 458 well above. Support lower comes at 413.50 and 408 then 407 and 403.50 before 400.70 and 397. Uptrend.

SPY Weekly, $SPY

With one week left in April the weather is turning warmer and equity markets are getting a spring in their step. Elsewhere look for Gold to continue its short term move higher while Crude Oil consolidates in a tight range. The US Dollar Index continues to move to the downside while US Treasuries bounce in their downtrend in their uptrend. The Shanghai Composite looks to continue broad consolidation while Emerging Markets consolidate in the uptrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe, with the SPY leading the charge and the QQQ moving to join it while the IWM consolidates. On the shorter timeframe the SPY is also the strongest with the QQQ starting to move higher and the IWM on the edge of a breakout. If that happens it might be time for the IWM to take the lead again. Use this information as you prepare for the coming week and trad’em well.

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