SPY Trends and Influencers August 29, 2020

• Posted by Greg Harmon
• on August 29th, 2020

Last week’s review of the macro market indicators saw with the August options expiration in the past, equity markets showed some divergence, with the small caps moving lower while the S&P 500 and Nasdaq 100 set all-time highs. Elsewhere looked for Gold ($GLD) to continue to consolidate in the uptrend while Crude Oil ($USL) slowly drifted higher in consolidation. The US Dollar Index ($DXY) paused in consolidation while US Treasuries ($TLT) consolidated in their uptrend.

The Shanghai Composite ($ASHR) looked to consolidate over support while Emerging Markets ($EEM) consolidated in their uptrend.  The Volatility Index ($VXX) looked to continue the slow drift lower making the path easier for equity markets to the upside. Their charts were mixed though, with the $SPY and $QQQ looking strong on both timeframes. The $IWM was building a bull flag on the shorter timeframe and showing a reversal on the longer chart.

The week played out with Gold swinging wildly in a $75 range ending higher while Crude Oil continued in the tight range drift higher. The US Dollar pulled back to the bottom of recent consolidation while Treasuries dove lower. The Shanghai Composite started lower and then reversed Friday while Emerging Markets inched up to 7 month highs.

Volatility rose up off of the recent base but not materially higher. This was not enough to stall equities from moving higher. The SPY and QQQ continued higher all week to new all-time highs and then paused Friday. The IWM also started higher Monday but then held in consolidation the rest of the week, still lagging. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY was at the February highs and in consolidation when the week started. It gapped up Monday and then filled the gap before running to a new all-time high. Then it repeated that pattern, gap up, fill the gap then close a new all-time high, every day of the week. The daily chart shows the RSI is now getting deep into overbought territory with the MACD rising but shy of prior tops. The Bollinger Bands® continue to run higher with price riding the top rail.

The weekly chart shows a strong move higher once cleared the prior top. The RSI on this timeframe is rising and bullish with the MACD reaching extreme levels. The Bollinger Bands are starting to open on this timeframe. There is no resistance higher, with the 138.2% extension of the prior drop at 385.50 above. There is support at 344.70 and 342.20 then 341 and 339.30 before 336 and 332. Momentum on both timescales is hot suggesting it could use some consolidation or a pullback. Uptrend.

SPY Weekly, $SPY

With one trading day left in August, equity markets have put up stellar returns on the month despite the hot lazy summer weather. Elsewhere look for Gold to consolidate in its uptrend while Crude Oil continues to slowly drift higher. The US Dollar Index continues to move to the downside while US Treasuries may be breaking consolidation to the downside. The Shanghai Composite looks to move higher in consolidation while Emerging Markets move up out of consolidation.

The Volatility Index looks to continue to run flat in the February gap making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could us a reset on momentum measures as both are extended. The IWM may be ready to break its bull flag to the upside. 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 28, 2020  

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