SPY Trends and Influencers December 23, 2023

• Posted by Greg Harmon
• on December 23rd, 2023

Last week, the review of the macro market indicators saw with the December FOMC meeting and Quadruple Witching in the books, equity markets posted another stellar week as they headed into the last full week of the year. Elsewhere looked for Gold ($GLD) to continue higher while Crude Oil ($USO) continued to trend lower. The US Dollar Index ($DXY) continued to drift to the downside while US Treasuries ($TLT) continued in their short term uptrend.

The Shanghai Composite ($ASHR) looked to continue the trend lower while Emerging Markets ($EEM) possibly broke resistance to the upside. The Volatility Index ($VXX) looked to remain very low and stable making the path easier for equity markets to the upside. Their charts looked strong, especially the $SPY and $QQQ on the longer timeframe. On the shorter timeframe the $IWM, QQQ and SPY could use a reset on momentum measures as all were extended.

The week played out with Gold holding in a consolidation until a late week move higher while Crude Oil consolidated slightly higher in a $4 range all week. The US Dollar continued to the downside reaching a new 5 month low while Treasuries finally ran out of fuel and stalled. The Shanghai Composite continued lower to trend support while Emerging Markets dropped back invalidating the possible break out.

Volatility rose back into the teens, but barely. This put some pressure on equities midweek and they sold off Wednesday. But by Thursday morning traders had forgotten why they were selling and equities reversed to finish the week little at the highs. This resulted in the SPY approaching the all-time high and the QQQ ending at the all-time high set Tuesday. The IWM continued its break higher ending at a 20 month high. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after breaking to a nearly 2 year high in its uptrend. It printed some small indecision candles to end last week and continued with small body candles in consolidation on the daily chart early in the week. Wednesday saw a sharp move lower but it climbed higher the rest of the week, recovering over 88.6% of the Wednesday drop and finished the week higher. The RSI has reset lower out of overbought territory while the MACD is level and positive.

The weekly chart shows continuation higher. The Cup and Handle target of 570 is still far off though as price rides the Bollinger Bands® higher. The RSI on this timeframe is rising in the bullish zone with the MACD positive and moving up. There is resistance higher at 478.50. Support lower is at 473 and 471 then 470 and 466 before 463.50 and 460. Uptrend.

SPY Weekly, $SPY

With only 4 trading days left in 2023, equity markets continue to show strength. Elsewhere look for Gold to continue its move higher while Crude Oil extends a short term move to the upside. The US Dollar Index continues to drift to the downside while US Treasuries continue their short term uptrend. The Shanghai Composite looks to continue the trend lower while Emerging Markets are back in broad consolidation.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts continue to look strong, especially on the longer timeframe. On the shorter timeframe there is now some rotation from adding to the QQQ and SPY to putting money into the IWM. Use this information as you prepare for the coming week and trad’em well.

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