SPY Trends and Influencers August 28, 2021

Last week’s review of the macro market indicators saw with August monthly options expiration in the books, equity markets tackled their 4th monthly expiration week dip and ended the week moving back up. Elsewhere looked for Gold ($GLD) to continue to consolidate while Crude Oil ($USL) pulled back. The US Dollar Index ($DXY) continued to move to the upside while US Treasuries ($DXY) also worked in an uptrend. The Shanghai Composite ($ASHR) looked to pullback in consolidation while Emerging Markets ($EEM) trended lower.

The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts looked mixed on the shorter timeframe with the $SPY and $QQQ driving back towards their all-time highs while the $IWM held at the bottom of a long consolidation range. The longer timeframe showed the SPY strong and trending higher with the QQQ in a short consolidation at the top and the IWM stuck in that long consolidation.

The week played out with Gold pushing over 1800 and quickly meeting resistance while Crude Oil reversed and continued higher all week. The US Dollar rolled over from a higher high and dropped all week while Treasuries met resistance and fell back but to a higher low. The Shanghai Composite made a higher high in a reversal and then stalled while Emerging Markets bounced but stalled at a lower high again.Volatility worked lower in a choppy fashion to end the week near the August lows. This added to the wind behind equities and they responded by starting the week with a move higher Monday. The IWM continued higher through mid week while the SPY and QQQ stalled after Monday, with all 3 seeing some profit taking Thursday ahead of the Friday FOMC Jackson Hole speech. They resumed higher Friday with record highs for the SPY and QQQ. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just off the all-time highs and moving higher. It continued higher early, with a new all-time high Monday and then followed that up with 2 more through Wednesday. After a shallow pullback Thursday, it roared higher to close the week at another all-time high. The daily chart shows the price slowly grinding higher as the Bollinger Bands® open to the upside. The SMA’s continue to rise in parallel with the RSI pushing higher in the bullish zone. The MACD is crossing up and positive after the pullback.

The weekly chart shows it closing in on the 200% extension of the retracement of the pandemic drop at 459. The RSI on this timeframe is holding steady and strong at the edge of overbought in the bullish zone. The MACD is level and positive. There is no resistance higher. Support below comes at 447 and 446 then 444 and 441 before 437.50 and 436 then 430.50. Uptrend.

SPY Weekly, $SPY

With the last full week of August in the books, equity markets showed strength with aggressive moves higher and all-time highs. Elsewhere look for Gold to continue its push out of long term consolidation higher while Crude Oil may also be resuming the uptrend. The US Dollar Index looks on the edge of breaking the long downtrend the while US Treasuries pause in their uptrend. The Shanghai Composite looks to continue in broad consolidation while Emerging Markets continue to be biased to move lower. The

Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts also look strong, especially on the shorter timeframe where the IWM had a massive week. On the longer timeframe both the QQQ and SPY also look great while the IWM remains in the broad consolidation. Use this information as you prepare for the coming week and trad’em well.

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