SPY Trends and Influencers January 1, 2022

• Posted by Greg Harmon
• on January 1st, 2022

Last week’s review of the macro market indicators saw with only 1 week left in 2021, equity markets showed strength with a rebound from an ugly start. Elsewhere looked for Gold ($GLD) to continue its consolidation while Crude Oil ($USL) drifted towards the top of a consolidation range. The US Dollar Index ($DXY) continued to consolidate in the uptrend while US Treasuries ($TLT) marked time sideways. The Shanghai Composite ($ASHR) looked to continue in consolidation as well while Emerging Markets ($EEM) continued lower.

The Volatility Index ($VXX) looked to remain at normal levels making the path easier for equity markets to the upside. Their charts looked strong, especially on the shorter timeframe. On the longer timeframe both the $QQQ and $SPY continued to show strength in consolidation, while the $IWM floundered in the middle of the year long consolidation range.

The week played out with Gold pushing to the upside in the consolidation range while Crude Oil made a move to the upside. The US Dollar drifted to the downside while Treasuries also moved lower. The Shanghai Composite held in a tight range while Emerging Markets rose in their downtrend.

Volatility drifted lower after a gap up open Monday, ending the week little changed. Equities responded by starting the week with a move higher Monday. The SPY held the rest of the week while the QQQ and IWM bounced around ending little changed. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week rising after a pullback and pennies from the all-time high. It continued higher Monday making a new all-time high and then settled into a tight range the rest of the week. It made another high Wednesday, the 70th of the year, the second most times ever in a year.

With the higher week it needs only to close above 470.60 on Tuesday next week to register a Santa Claus Rally and bode well for 2022. The daily chart shows the bull flag building at the highs. The Bollinger Bands® are opening higher with the RSI flat in the bullish zone and the MACD rising and positive.

The weekly chart shows the break of the 8 week resistance. The RSI on this timeframe is rising in the bullish zone with the MACD crossing up and positive. There is no resistance above 476 and 478.50. Support lower comes at 473 then 471 and 470 before 466 and 463.50 then 460. Uptrend.

SPY Weekly, $SPY

As the books close on 2021, equity markets posted a good year for tech and large caps while small caps marked time the entire year. Elsewhere look for Gold to continue its rise in consolidation while Crude Oil continues a short term move higher. The US Dollar Index looks to consolidate in the uptrend while US Treasuries churn in a range sideways. The Shanghai Composite looks to continue broad consolidation while Emerging Markets continue the downtrend.

The Volatility Index looks to remain in the normal range making the path easier for equity markets to the upside. The charts of the large cap SPY and tech heavy QQQ look strong on the longer timeframe, with the SPY leading the way. On the shorter timeframe both the QQQ and SPY remain near all-time highs but with stalling momentum, suggesting possible short term erosion. The IWM remains content to hold in the consolidation range that has held it almost all of 2021. Use this information as you prepare for the coming week and trad’em well.

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