SPY Trends and Influencers April 9, 2022
- Posted by Greg Harmon
- on April 9th, 2022
Last week’s review of the macro market indicators saw with the first Quarter of 2022 in the books, equity markets saw some profit taking after a strong move higher. Elsewhere looked for Gold to consolidate in its uptrend while Crude Oil pulled back in its trend higher. The US Dollar Index looked to consolidate its move higher while US Treasuries bounced in their downtrend. The Shanghai Composite looked to continue the consolidation while Emerging Markets bounced in their downtrend.
The Volatility Index was 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 took the form of a possible top in the rally for the QQQ and SPY. As usual, the IWM continue to move sideways, in its lower range.
The week played out with Gold continuing to move sideways in a narrow range while Crude Oil continued the trend lower. The US Dollar broke its short term range to the upside and printed an 11 month high while Treasuries fell to an 11 month low. The Shanghai Composite may have made another lower high but still holds over long term support while Emerging Markets saw the bounce fail at a lower high and they moved back lower.
Volatility was volatile on the week, dropping to test the March lows then reversing higher before ending the week moving back lower. Equities followed the inverse path starting higher before a 2 day sell off and then some recovery into the end of the week. This resulted in the SPY, the IWM and the QQQ ending lower on 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 break to a higher high. It held there Monday and Tuesday at the 61.8% retracement of the pullback from the all-time high range. Wednesday saw a gap down below the 200 day SMA and it held there the rest of the week, closing the gap along the way and just above the 20 day SMA. The daily chart shows the RSI falling back to the midline with the MACD crossed down and starting to reset lower.
The weekly chart shows confirmation of a Shooting Star reversal. The RSI on this timeframe is rolling over at the midline with the MACD looking like it might avoid a cross up. There is resistance above at 451 and 454 then 457 and 460 before 463.50. Support lower comes at 447 and 444 then 441 and 437.50 before 435.50 and 430.50. Pullback in Short Term Uptrend.
SPY Weekly, $SPY
Heading into April options expiration and the short pre-Easter week, equity markets have lost their strength. Elsewhere look for Gold to consolidate while Crude Oil pulls back in the uptrend. The US Dollar Index continues to drive to the upside while US Treasuries drive lower in a downtrend. The Shanghai Composite looks to consolidate while Emerging Markets continue to move lower.
The Volatility Index looks to remain in the normal range making the path easier for equity markets to the upside. Their charts look weak though, especially on the longer timeframe. On the shorter timeframe the IWM, the QQQ and the SPY also look to have an easier path lower. Use this information as you prepare for the coming week and trad’em well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)