SPY Trends and Influencers August 20, 2022

• Posted by Greg Harmon
• on August 20th, 2022

Last week’s review of the macro market indicators saw heading into August Options Expiry, equity markets responded to the inflation data with strong moves to the upside and their first intermediate term higher highs since the all-time highs. Elsewhere looked for Gold ($GLD) to consolidate while Crude Oil ($USO) continued the downtrend. The US Dollar Index ($DXY) continued the pullback in the uptrend while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked ready for a short term move higher while Emerging Markets ($EEM) might also reverse higher.

The Volatility Index ($VXX) looked to continue to move lower in the normal range making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe momentum was starting to get a bit hot so the $SPY, $IWM and $QQQ might be ready for a pause.

The week played out with Gold dropping lower while Crude Oil continued the trend lower but caught a bid late in the week. The US Dollar found renewed strength and moved to a one month high while Treasuries moved lower, gathering steam late in the week. The Shanghai Composite held in a tight range under resistance while Emerging Markets fell back from resistance.

Volatility held steady after a 2 month move lower and then saw a bounce Friday. This put pressure on equities late in the OpEx week and they responded with a move lower to finish the week down. This ended the 4 week streak of higher closes in the SPY, the IWM and the QQQ. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week trending higher after printing its first higher high since the start of the year. This move is the first step in a trend reversal. It continued higher Monday and then Tuesday reached up to touch the 200 day SMA before selling off. It held slightly lower through Thursday before profit taking Friday led it to its first down week in the past five. The daily chart shows the RSI rolling over out of overbought territory with the MACD curling to cross down.

The weekly chart shows the red candle with an upper shadow touching the 50 week SMA, a possible topping candle. The RSI on this timeframe is holding the move over the midline with the MACD rising but still negative. There is support lower at 420 and 417.50 then 413.50 and 411 before 407.50 and 405.50. Resistance above is at 423.50 and 425.50 before 428.50 and 430 then 435.50 and 437.50 then 441. Pause in Uptrend.

SPY Weekly, $SPY

With August options expiration in the books, equity markets saw some profit taking after a 4 week run higher. Elsewhere look for Gold to continue its downtrend while Crude Oil also continues to trend lower. The US Dollar Index continues to drive to the upside while US Treasuries resume their downtrend. The Shanghai Composite looks to consolidate between short term and resistance and long term support while Emerging Markets resume their move lower.

The Volatility Index looks to remain in the normal range taking some pressure off of equity markets and allowing them to move to the upside. Their charts look strong on the longer timeframe, but still shy of a long term reversal. On the shorter timeframe the QQQ, IWM and SPY are getting a nice reset lower on the momentum measures. As long as they can print higher lows the nascent uptrend should remain. A lower low would deflate the optimism out of the markets. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview August 19, 2022  

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus