SPY Trends and Influencers August 6, 2022

• Posted by Greg Harmon
• on August 6th, 2022

Last week’s review of the macro market indicators saw with July in the books, equity markets were showing strength on the short term and on the cusp of a full blown reversal. Elsewhere looked for Gold ($GLD) to continue its short term move higher while Crude Oil ($USO) consolidated. The US Dollar Index ($DXY) continued in a short term move lower while US Treasuries ($TLT) consolidated. The Shanghai Composite ($ASHR) looked to continue in consolidation while Emerging Markets ($EEM) consolidated in the downtrend.

The Volatility Index ($VXX) looked to continue lower towards the normal range making the path easier for equity markets to the upside. Their charts looked strong, especially on the shorter timeframe. On the longer timeframe both the $IWM and $SPY were approaching key levels to confirm an intermediate term reversal. The $QQQ did confirm a reversal and now needed to show follow through.

The week played out with Gold meeting resistance as it hit 1800 and dropping back while Crude Oil dropped out of consolidation and closed under 90 for the first time since February. The US Dollar found support and started to consolidate while Treasuries were knocked back from resistance. The Shanghai Composite broke consolidation to the downside but quickly recovered while Emerging Markets look as though they are basing.

Volatility continued lower, closing at the lowest level in over 3 months. This gave equities additional breathing room and they moved higher on the week. The SPY and the QQQ saw profit taking Friday bring it down on the day but up for the week while the IWM fared better, closing strong Friday and up on the week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week moving higher and about to test the June high. It paused early and then rose Wednesday to the June high area before stalling and holding there the rest of the week, just short of making a higher high. The daily chart shows the rebound Friday holding it over the 100 day SMA as it rides the Bollinger Bands® higher. The RSI is rising in the bullish zone with the MACD positive and moving higher.

The weekly chart shows the stall at the 100 week SMA. The RSI is now at the midline with the MACD crossed up and rising, but negative. There is resistance at 413.75 and 417.50 then 420 and 423 then 425.50 and 428.50. Support lower comes at 411 and 407.50 then 405.50 and 403.50 before 400.50 and 397.50. It will take to a close over 417.50 to firmly set a higher high and gather more steam from investors on the sidelines. Short Term Uptrend.

SPY Weekly, $SPY

With the first week in August over, equity markets continue to show strength on both timeframes and on the cusp of a full blown reversal. Elsewhere look for Gold to continue its short term move higher while Crude Oil moves lower short term. The US Dollar Index continues in a short term move lower while US Treasuries pullback in consolidation. The Shanghai Composite looks to continue in consolidation while Emerging Markets consolidate in the downtrend.

The Volatility Index looks to continue lower in the normal range 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 IWM and SPY are approaching key levels to confirm an intermediate term reversal. The QQQ continues to move higher after printing a higher high. Use this information as you prepare for the coming week and trad’em well.

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