SPY Trends and Influencers February 20, 2021

Last week’s review of the macro market indicators saw heading into the President’s Day weekend that equity markets continued to look very strong. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USL) moved to the upside. The US Dollar Index ($DXY) had paused in the downtrend while US Treasuries ($TLT) continued their trend lower. The Shanghai Composite ($ASHR) looked to resume its uptrend after the Lunar New Year holiday while Emerging Markets ($EEM) continued to march to new all-time highs.

The Volatility Index ($VXX) looked to remain very low and drifting toward a pandemic gap fill, making the path easier for equity markets to the upside. Their charts continued to look strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY were moving back higher again while the $IWM paused to catch its breath over support.

The week played out with Gold dropping back to retest the late November low while Crude Oil continued higher early before profit taking at the end of the week. The US Dollar held and then bounced slightly, establishing a higher low, while Treasuries gapped down and held ending at a new 52 week low. The Shanghai Composite continued higher after the break, ending at a 5½ year high, while Emerging Markets opened the week at a new all-time high and then consolidated.

Volatility rose early in the week but fell back mid week to end little changed. This put initial pressure on equities and they started the week with a move lower after a gap up open. All found support by mid day Thursday and reversed to finish the week slightly lower. This resulted in the IWM and QQQ setting in another higher low with the SPY continuing to hold at the highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at an all-time high. It started higher Tuesday but could not hold up and dipped slightly. It spent the rest of the week then holding over support in consolidation. The daily chart shows the movement sideways but back toward the 20 day SMA. The RSI is resetting lower in the bullish zone with the MACD rolling over and about to cross down.

The weekly chart printed a small body candle giving up a small bit of ground. The RSI is stalling high in the bullish zone with the MACD moving higher. It is a bit stronger on this timeframe. There is resistance higher at 393 and 395. Support lower comes at 389 and 386 followed by 381.25 and 375.50 before 372.50 and 369. Uptrend.

SPY Weekly, $SPY

Heading into the last week of February equity markets are showing some fatigue after strong moves up. Elsewhere look for Gold to continue its pullback while Crude Oil may consolidate in the uptrend. The US Dollar Index continues to trend lower while US Treasuries continue their downtrend. The Shanghai Composite looks to continue the move higher while Emerging Markets drive for new highs.

The Volatility Index looks to remain low making the path easier for equity markets to the upside. Their charts continue to look strong on the longer timeframe. On the shorter timeframe both the QQQ and SPY are now in consolidation over support with the IWM poised to take the lead after a bounce. Use this information as you prepare for the coming week and trad’em well.

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