SPY Trends and Influencers August 17, 2024

Last week, the review of the macro market indicators saw with the first week of August in the books, equity markets showed resilience with a rebound from an ugly start induced by a growing narrative of recessionary fears. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) consolidated in a narrowing range. The US Dollar Index ($DXY) continued to drift in broad consolidation while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term trend lower while Emerging Markets ($EEM) consolidated under long term resistance.

The Volatility Index ($VXX) looked to have settled after a spike to 4 year highs removing the pressure on equity markets for now. The $SPY and $QQQ ETF charts continued to look strong on the longer timeframe. On the shorter timeframe both the QQQ and SPY had reset momentum measures but also had a lot of upside work to put in before looking strong. The $IWM was back in consolidation mode again after a failed break higher.

The week played out with Gold making new all-time highs to start and end the week while Crude Oil fell back in consolidation. The US Dollar found support on a pullback and held at the low end of consolidation while Treasuries continued to hold in consolidation over prior resistance. The Shanghai Composite made a new 6 month low Wednesday before a small bounce while Emerging Markets pushed back up through prior short term resistance.

The Volatility Index continued to drop, finishing the week in the low teens. This put a tailwind behind equities and they responded with a 5 day move higher. This resulted in the SPY and QQQ recovering to their end of July levels while the IWM moved back above the prior channel. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week rising off a nearly 10% pullback, the largest drawdown since late 2023. It continued to move higher Monday and followed that with another 4 days of upside to end the week positive for the month of August and at a 1 month high. The RSI on the daily chart shows a move to the edge of the bullish zone with the MACD about to turn positive.

The weekly chart shows a second strong week higher and gives a target to 580 on a Measured Move higher. The RSI held and reversed above the midline in the bullish zone with the MACD leveling after resetting lower in the bullish zone. There is resistance above at 556.50 and 561.50 then 565. Support lower sits at 549.50 and 545.75 then 542 and 540 before 537 and 534. Uptrend.

SPY Weekly, $SPY

With the August options expiration in the books, equity markets showed strength, continuing the climb out of July pullback. Elsewhere look for Gold to continue its uptrend to new highs while Crude Oil consolidates in a tightening range. The US Dollar Index continues to move to the downside in consolidation while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the short term trend lower while Emerging Markets have re-broken resistance and may start a new uptrend.

The Volatility Index looks to remain low after a rapid pullback to levels from 2 weeks ago making the path easier for equity markets to the upside. Their charts look strong, especially the SPY and QQQ on the longer timeframe. On the shorter timeframe both the QQQ and SPY will gain buyers on a move higher next week over short term resistance. The IWM is showing its own strength as well breaking back above long term resistance. Use this information as you prepare for the coming week and trad’em well.

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