SPY Trends and Influencers December 9, 2023

• Posted by Greg Harmon
• on December 9th, 2023

Last week, the review of the macro market indicators saw with the first day of December in the books, equity markets continued to show strength but with some rotation from tech to large and small cap stocks. Elsewhere looked for Gold ($GLD) to continue its break out to new highs while Crude Oil ($USO) consolidated in a downtrend. The US Dollar Index ($DXY) continued the short term drift to the downside while US Treasuries ($TLT) bounced in their downtrend.

The Shanghai Composite ($ASHR) looked to continue the short term drift lower while Emerging Markets ($EEM) consolidated under long term resistance. The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe the $QQQ was seeing a digestive pause as the $SPY and the $IWM benefited from money flowing into equities.

The week played out with Gold spiking to the upside at the open Monday and then dropping back into consolidation over 2000 the rest of the week while Crude Oil broke down through support to a 6 month low. The US Dollar bounced but met resistance late in the week while Treasuries continued their move higher, but meeting resistance just short of a higher high. The Shanghai Composite continued to pull back toward the October low while Emerging Markets pulled back from resistance in consolidation.

Volatility continued to hold near 3 year lows, little changed on the week. This has removed the pressure on equities , despite this they struggled to find direction bouncing in a range all week. All found support by Wednesday and reversed to finish the week little changed. This resulted in the SPY and QQQ holding near pattern breakout triggers with the IWM continuing its break higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week drifting higher and slowing as it hit the July top. It continued to drift up but managed a string 2 day end of the week to close at a 20 month high. The daily chart shows the Bollinger Bands® starting a possible squeeze. The RSI is deep in the bullish zone though with the MACD crossed down but now leveling in the pullback.

The weekly chart is dominated by the Cup and Handle with a target to 570, now triggering. The RSI on this timeframe is rising in the bullish zone with the MACD positive and climbing. But the Bollinger Bands are rising on this timeframe. There is resistance at 463.50 and 466 then 470 and 471 before 473 and 478.50. Support lower comes at 460 and 457 then 454 and 451 before 447 and 444. Uptrend.

SPY Weekly, $SPY

With just 3 weeks left in the year, equity markets continue to show strength with large cap and tech indexes approaching all-time highs. Elsewhere look for Gold to continue its uptrend while Crude Oil continues to drop. The US Dollar Index continues to bounce in the downtrend while US Treasuries do the same. The Shanghai Composite looks to continue the downtrend while Emerging Markets drop in broad consolidation.

The Volatility Index looks to remain very low and stable creating a positive environment for equity markets to move to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY look to continue to drift higher. The IWM has taken the lead in the short term. Use this information as you prepare for the coming week and trad’em well.

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