SPY Trends and Influencers August 7, 2021

• Posted by Greg Harmon
• on August 7th, 2021

Last week’s review of the macro market indicators saw, with the month of July in the books, equity markets showed some signs of being tired. Elsewhere looked for Gold ($GLD) to possibly reverse higher while Crude Oil ($USL) continued in an uptrend. The US Dollar Index ($DXY) continued to drift to the downside in the short term while US Treasuries ($TLT) pushed higher in an uptrend. The Shanghai Composite ($ASHR) looked to continue the short term move lower while Emerging Markets ($EEM) trended lower at support.

The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts looked strong on the longer timeframe with the exception of the $IWM which remained marking time sideways. On the shorter timeframe both the $QQQ and $SPY shifted to short term consolidation with momentum divergences while the IWM muddled along.

The week played out with Gold drifting lower until it crashed down Friday while Crude Oil met resistance and went through a shallow pullback. The US Dollar found support moved forcefully higher Friday while Treasuries met resistance in the week and fell back hard Friday. The Shanghai Composite moved higher Monday but quickly met resistance and paused while Emerging Markets held in a tight range all week stalling a bounce move higher.

Volatility rose Monday but fell back the rest of week to end at a 3 week low. This put initial pressure on equities and they responded by starting the week moving lower. All found support mid day Tuesday and reversed to recoup those loses. The SPY and QQQ went on to make new all-time highs with the IWM stalling again as it hit prior resistance. 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 high. It pulled back Monday, but not much, and then tried to reverse Tuesday, only to end slightly lower. Wednesday it moved up and held, making a new high before giving it up again Thursday. Friday saw another move higher to end the week at another all-time high. The daily chart shows the RSI flat in the bullish zone but at a slightly lower level. The MACD is flat and positive. The Bollinger Bands are pointing higher.

The weekly chart shows a positive candle to negate the red candle from last week. The RSI is strong in the bullish zone with the MACD flat and positive. There is no resistance higher with the 200% extension of the pandemic retracement at 458. Support lower comes at 441 and 437 then 435.50 and 433.50 then 430.50 and 428.50. Uptrend.

SPY Weekly, $SPY

With the first week of August in the books, equity markets showed strength in large caps and tech after a weak start, with the small caps still rangebound. Elsewhere look for Gold to continue the reversal lower while Crude Oil consolidates in a pullback. The US Dollar Index reverses to the upside while US Treasuries reverse lower. The Shanghai Composite looks to be stalling in the uptrend while Emerging Markets stall at a lower high.

The Volatility Index looks to remain very low 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 SPY and QQQ look ready to continue higher while the IWM continues in consolidation. Use this information as you prepare for the coming week and trad’em well.

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