SPY Trends and Influencers August 24, 2024

• Posted by Greg Harmon
• on August 24th, 2024

Last week, the review of the macro market indicators saw with the August options expiration in the books, equity markets showed strength, continuing the climb out of the July pullback. Elsewhere looked for Gold ($GLD) to continue its uptrend to new highs while Crude Oil ($USO) consolidated in a tightening range. The US Dollar Index ($DXY) continued to move to the downside in consolidation while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term trend lower while Emerging Markets ($EEM) had re-broken resistance and looked to start a new uptrend.

The Volatility Index ($VXX) looked 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 looked strong, especially the $SPY and $QQQ on the longer timeframe. On the shorter timeframe both the QQQ and SPY looked to gain buyers on a move higher in the new week over short term resistance. The $IWM was showing its own strength as well breaking back above long term resistance.

The week played out with Gold pushing to a new all-time high Monday and Tuesday before some profit taking while Crude Oil printed a new 7 month low before a bounce. The US Dollar continued lower, accelerating down after the Powell speech Friday while Treasuries consolidated near the August highs. The Shanghai Composite gave up its weak bounce and fell back to last week’s lows while Emerging Markets continued their nascent move higher.

Volatility settled into a tighter range in the teens, up slightly from last week. This let equities continue the run higher early but they saw selling ahead of Powell’s speech Thursday afternoon. The SPY and QQQ found support and reversed Friday to finish the week higher. This resulted in the SPY ending back near all-time highs. The IWM was the big winner with a large move to the upside upon the Powell confirmation of a dovish view. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pressing on short term resistance in a V-shaped recovery on the daily chart from the quick drop at the start of August. It broke above that resistance Monday and then held there all week. The RSI has moved back into the bullish zone with the MACD rising and bullish.

The weekly chart shows a third week moving higher and closing at the highest weekly close ever. The RSI is rising in the bullish zone with the MACD turning back up after a reset lower and positive. There is resistance at 565 and a Measured Move to 580 above that. Support lower is at 561.50 and 556.50 then 549.50 and 545.75 before 542 and 540. Uptrend.

SPY Weekly, $SPY

With the Fed Jackson Hole meeting in the rear view mirror, equity markets continued their progress higher, shifting from the large caps and tech names to small caps Friday, but without a rotation this time. Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates in a narrow range and at risk for a drop. The US Dollar Index continues to move to the downside while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the downtrend while Emerging Markets may start a new uptrend.

The Volatility Index looks to remain low and stabilizing making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe, with the IWM joining the SPY and QQQ in that view. On the shorter timeframe both the QQQ and SPY are slowing down and watching the short term money flow into the IWM. Use this information as you prepare for the coming week and trad’em well.

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