SPY Trends and Influencers December 3, 2022

Last week’s review of the macro market indicators saw heading into the last month of the year, equity markets showed continued strength as they continued higher. Elsewhere looked for Gold ($GLD) to continue to digest its move to the upside while Crude Oil ($USO) continued lower. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) bounced in their downtrend. The Shanghai Composite ($ASHR) looked to pause in its short term uptrend while Emerging Markets ($EEM) bounced in their downtrend.

The Volatility Index ($VXX) was back at normal levels making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe with the $SPY leading the charge higher. On the shorter timeframe things looked messier with both the $QQQ and $IWM in a consolidation while the SPY broke higher.

The week played out with Gold driving higher through 1800 and meeting resistance while Crude Oil found support and reversed higher. The US Dollar moved to a 5 month low while Treasuries continued their move to the upside. The Shanghai Composite broke its bull flag to the upside while Emerging Markets also moved up continuing their path higher.

Volatility dropped back into the teens for the first time since August. This put a strong wind at the back of equities and they responded strong midweek move higher. This resulted in the SPY at a 10 week high and the QQQ and IWM back at the November highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week drifting lower in a broad 6 week trend to the upside. The drift continued early in the week before a very strong move to the upside Wednesday following remarks from Fed Chairman Powell. It held Thursday and then opened Friday nearly 2% lower following the hot Non-Farm Payroll report. It then moved higher all day, closing gap before a slight pullback. It ended up on the week, extending the current trend. The daily chart shows the RSI in the bullish zone with the MACD positive and rising.

The weekly chart shows the continued run up from the October low now approaching the 50 week SMA with the 100 week SMA above. The RSI on this timeframe is rising through the midline with the MACD negative but climbing. There is resistance at 407.50 and 411 then 413.50 and 417.50 before 420 and 423.50. Support lower comes at 405.50 and 403.50 then 400.50 and 397.50 before 394.50 then 391.50 and 389.50. Still looking for a close over 432 before considering the bear market to have reversed. Short Term Uptrend.

SPY Weekly, $SPY

With less than 1 month left in the year, equity markets continue to show strength, but not quite enough to declare an end to the bear market yet. Elsewhere look for Gold to continue its short term rise while Crude Oil consolidates in a broad range. The US Dollar Index continues to trend to the downside while US Treasuries continue their short term uptrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets also improve.

The Volatility Index looks to continue to the downside in the normal range making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and IWM are finding new resistance while the SPY continues the march higher. Use this information as you prepare for the coming week and trad’em well.

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