SPY Trends and Influencers February 1, 2025

• Posted by Greg Harmon
• on February 1st, 2025

Last week, the review of the macro market indicators saw heading into the January FOMC meeting, equity markets showed strength with a 4 day trend higher before some profit taking Friday. Elsewhere looked for Gold ($GLD) to continue its push to a new high while Crude Oil ($USO) pulled back in consolidation. The US Dollar Index ($DXY) looked to have stalled in its move to the upside while US Treasuries ($TLT) resumed their downtrend. The Shanghai Composite ($ASHR) looked, with the Lunar New Year Holiday coming, to continue the chop in consolidation while Emerging Markets ($EEM) continued the short term downtrend.

The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe the $SPY, the $QQQ and the $IWM were all reversing out of the pullbacks started in December with the SPY the first to print a new all-time high. The QQQ was less than 2% away from its prior top with the IWM still over 5% below its all-time high.

The week played out with Gold continuing up to a new all-time high Thursday before profit taking while Crude Oil continued to the bottom of the consolidation range. The US Dollar found support after a shallow pullback while Treasuries try to hold in consolidation and not resume the downtrend. The Shanghai Composite saw little action Monday before taking off for the rest of the week for the Lunar New Year while Emerging Markets moved up to breach the falling channel.

Volatility spiked Monday and then fell back the rest of the week. This dropped equities Monday but saw them claw back most of the drop ahead of the FOMC decision Tuesday. They held through Thursday, post the decision and moved higher Friday to close the Monday gaps before confirmation of the implementation of tariffs Saturday sparked a sell off. This resulted in the SPY, the QQQ and the IWM dropping back to the Wednesday close area. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just a fraction off the new all-time high set Thursday. It gapped down Monday near the 20 day SMA on the daily chart and then saw an intraday move higher. That move up continued through midday Friday to the prior high, with a brief bit of chop around the FOMC decision and press conference Wednesday. Friday afternoon tariff headlines lead to a sell off that left it back near the Wednesday close. Friday printed a bearish engulfing candle to end the week. The RSI holding in the bullish zone with the MACD level but positive.

The weekly chart shows the stall at last week’s peak, but still well over the 20 week SMA. The RSI is in the bullish zone with the MACD level after a pullback and positive. The Bollinger Bands® are slowing closing. There is support at 600 and 593 then 590 and 585 before 580 and 574.50. Resistance higher is at 604 and 609 before 610.25. Uptrend.

SPY Weekly, $SPY

With January in the books, equity markets showed resilience with a rebound from an ugly start Monday only to end the week on a sour note. Elsewhere look for Gold to continue its move to new highs while Crude Oil drops in a broad consolidation range. The US Dollar Index continues to drift to the upside while US Treasuries pullback in their downtrend. The Shanghai Composite looks to re-open and continue the sideways consolidation while Emerging Markets continue a short term move lower.

The Volatility Index looks to remain low and stable, making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe. On the shorter timeframe the SPY, the QQQ and the IWM all look to be in a short term consolidation, disappointing after what looked at midweek like a renewed short term uptrend. Use this information as you prepare for the coming week and trad’em well.

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