SPY Trends and Influencers August 1, 2020

Last week’s review of the macro market indicators saw there was one week left in July and it would be filled with reports from the market leaders as well as a preliminary print on the 2nd quarter GDP number and expiring COVID-19 benefits. With all this looming overhead, Equities had barely given up any ground. Elsewhere looked for Gold ($GLD) to continue higher while Crude Oil ($USL) consolidated in a narrow range. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) advanced towards their all-time highs. The Shanghai Composite ($ASHR) looked to continue the move lower in broad consolidation while Emerging Markets ($EEM) consolidated in the February gap. 

The Volatility Index ($VXX) looked to continue to drift low making the path easier for equity markets to the upside, but at a snail’s pace. Their charts also were becoming mixed after a long stretch of moving in unison. On the shorter timeframe both the $QQQ and $SPY were pulling back to support and from resistance, resetting momentum gauges. The $IWM was holding firm though. On the longer timeframe the IWM and SPY had stalled short of their prior highs while the QQQ saw some profit taking.

The week played out with Gold pushing up to new all-time highs while Crude Oil continued the 2 month long tight consolidation. The US Dollar accelerated the move to the downside while Treasuries moved up and over prior resistance. The Shanghai Composite found support and reversed higher while Emerging Markets continued to consolidate over support.

Volatility held at the recent lows in a very tight range. This eased the pressure on equities but they did not move, holding in place. This resulted in the SPY and IWM holding at recent highs into the month end but the QQQ ending the week moving back near all-time highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week inside the March gap and holding over the 20 day SMA. It continued to move in a small range all week, ending at a 88.6% retracement of the drop. The daily chart shows that 20 day SMA as support with the RSI holding in the bullish zone and the MACD flat and positive.

The weekly chart shows a strong push higher though. The RSI on this timeframe is on the edge of a move into the bullish zone with the MACD rising and positive. There is resistance at 327 and 332 then 339. Support lower comes at 324 and 320 then 318.50 and 313.50 before 309.50 and 305.50. Uptrend.

SPY Weekly, $SPY

With July in the books, equity markets showed resilience with a rebound from consolidation. Elsewhere look for Gold to continue higher while Crude Oil consolidates in a tight range. The US Dollar Index continues to move to the downside while US Treasuries continue their uptrend. The Shanghai Composite is building tightening consolidation while Emerging Markets consolidate in their uptrend.

The Volatility Index looks to continue to drift lower making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe. On the shorter timeframe both the SPY and IWM continue moving up in consolidation. The QQQ looks the strongest moving back toward all-time highs. Use this information as you prepare for the coming week and trad’em well.

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