SPY Trends and Influencers December 10, 2022

• Posted by Greg Harmon
• on December 10th, 2022

Last week’s review of the macro market indicators saw with less than 1 month left in the year, equity markets continued to show strength, but not quite enough to declare an end to the bear market yet. Elsewhere looked for Gold ($GLD) to continue its short term rise while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) continued to trend to the downside while US Treasuries ($TLT) continued their short term uptrend.

The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) also improved. The Volatility Index ($VXX) looked to continue to the downside in the normal range making the path easier for equity markets to the upside. Their charts also looked strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $IWM were finding new resistance while the $SPY continued the march higher.

The week played out with Gold dropping hard Monday and then clawing back all week while Crude Oil broke down to a new 12 month low. The US Dollar fell to a six month low, retesting the breakout level from June while the move up in Treasuries met resistance at the September gap. The Shanghai Composite move higher stalled as it touched the 200 day SMA while Emerging Markets consolidated at a retest of the September high.

Volatility rose up off of an 8 month low but remained in the normal range. This put initial pressure on equities and they responded by starting the week with a sharp 2 day move lower. All found support by Wednesday, with the SPY and QQQ reversing back higher Thursday and Friday while the IWM held at the low. All 3 gave up their gains in the last half hour Friday though. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back from the 200 day SMA and a higher high at the end of November. This was also from falling trend resistance. It started the week with a two day move lower that brought it back to short term support. It held there the rest of the week. The daily chart shows the RSI is back at the midline with the MACD crossed down.

The weekly view gives a clean chart in a long term downtrend with the short term uptrend in jeopardy. The RSI is dropping back at the midline with the MACD leveling and negative. There is support lower at 391.50 and 389 then 386 and 382 before 380. Resistance higher sits at 394.50 and 397.50 then 400.50 and 403.50 before 405.50 and 407.50. Short Term Uptrend in Jeopardy.

SPY Weekly, $SPY

Heading into December options expiration, equity markets have rolled again, threatening to reverse their short term uptrends. Elsewhere look for Gold to continue its short term uptrend while Crude Oil continues the downtrend. The US Dollar Index has found short term support in its downtrend while the US Treasuries short term uptrend has stalled. The Shanghai Composite looks to continue its short term move higher while Emerging Markets consolidate in their move higher.

The Volatility Index remains in the normal zone but higher making the path slightly more difficult for equity markets to the upside. Their charts look stronger on the longer timeframe, especially the SPY and QQQ, but with bits of weakness showing up. On the shorter timeframe the IWM is leading a reversal lower while the QQQ and SPY hold over support for now. Use this information as you prepare for the coming week and trad’em well.

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