SPY Trends and Influencers December 14, 2019

• Posted by Greg Harmon
• on December 14th, 2019

Last week’s review of the macro market indicators saw with the first week of December in the books, equity markets showed resilience with a rebound from an ugly start. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) continued to drift to the upside while US Treasuries ($TLT) pulled back in their uptrend.

The Shanghai Composite ($ASHR) looked to continue the slow drift lower while Emerging Markets ($EEM) consolidated under long term resistance.  Volatility ($VXXB) looked to remain low but off of the extreme lows keeping the bias to the upside for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ had both rebounded to end back near all-time highs. But it was the IWM stealing the show as it looked to take over leadership with a break above 11 month resistance.

The week played out with Gold finding its footing and trying to push to the upside while Crude Oil consolidated but with an upward drift. The US Dollar took a beating, but found support Friday while Treasuries jumped jumped around on news but ended slightly higher. The Shanghai Composite found support and started higher while Emerging Markets moved up to 8 month highs.

Volatility popped to start the week, but then fell back to end the week little changed. This put initial pressure on equities and they responded by starting the week with a move lower. All found support Tuesday and reversed by Wednesday to finish the week mostly higher. This resulted in the SPY and QQQ pressing to new all-time highs with the IWM continuing its break higher but then ending little changes. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after a couple of gap and go days, sitting just below the all-time high. It consolidated there through Wednesday, over the 20 day SMA. Following the FOMC decision it moved higher Thursday and then continued to move up Friday. It ended the week at a new all-time high. The daily chart shows the Bollinger Bands® running to the upside as price hugs the top of the band. The RSI is bullish and rising with the MACD turning back up. The late week move was also backed by higher volume.

On the weekly chart the move higher gets rid of the fear of a Hanging Man candle last week. The RSI is bullish and rising with the MACD doing the same. The target from the triangle break to 330 is getting closer with the longer target to 350 from the December low after that. There is no resistance higher. Support lower comes at 315 and 313.50 then 310 and 307.50 followed by 304.50. Uptrend.

SPY Weekly, $SPY

With one full week before the holiday week and options expiration this week, equity markets are running higher on all cylinders. Elsewhere look for Gold to consolidate in a bull flag while Crude Oil moves up in broad consolidation. The US Dollar Index looks to move lower in the short term while US Treasuries pause in their pullback. The Shanghai Composite looks to continue higher while Emerging Markets rise in consolidation.

Volatility looks to remain very low, keep the bias for the equity markets to the upside. Equities are following higher with that weight off of them. The SPY and QQQ, at all-time highs, look to continue higher. The IWM also looks good for more upside as it has broken a 14 month range. Use this information as you prepare for the coming week and trad’em well.

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