SPY Trends and Influencers January 21, 2023

Last week’s review of the macro market indicators saw heading into January options expiration, equity markets showed strength rising close to a test of important resistance. Elsewhere looked for Gold ($GLD) to continue to move higher while Crude Oil ($USO) consolidated in a tightening range. The US Dollar Index ($DXY) continued to move to the downside while US Treasuries ($TLT) came closer to an uptrend reversal. The Shanghai Composite ($ASHR) looked to possibly shift to an uptrend while Emerging Markets ($EEM) confirmed an uptrend.

The Volatility Index ($VXX) looked to remain normal and stable 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 were close to testing trend resistance with the $IWM on the verge of confirming a trend reversal higher if it could continue through resistance.

The week played out with Gold consolidating at the high while Crude Oil continued to consolidate under short term resistance. The US Dollar found support and slowed the move lower while Treasuries jumped early but gave up the gains to end little changed. The Shanghai Composite continued higher making a higher high while Emerging Markets extended the move higher.

The Volatility Index pressed higher early but fell back late in the week to end slightly higher. This put downward pressure on equities mid-week. All found support by Thursday and reversed Friday. This resulted in the SPY and QQQ ending under just downtrending resistance with the IWM continuing towards a 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 over the 200 day SMA and approaching the down trending resistance that has held it since the start of the move lower in January 2021. It touched that resistance Tuesday and then opened there Wednesday before running lower all day.

It gapped down again Thursday but held and then ripped higher Friday to end slightly lower on the week. The daily chart shows the close just pennies below the 200 day SMA. The RSI is moving back higher in the bullish zone after a reset to the midline with the MACD positive and turning back up.

The weekly chart shows a near doji on the week under resistance and the 50 week SMA. The RSI on this timeframe is running flat at the midline while the MACD is rising but negative. There is resistance at 397.50 and 400.50 then 403.50 and 405.50 before 407.50 and 411 then 413.50. Support lower comes at 394.50 and 391 then 389 and 386 then 382 and 380. Short Term Trend Higher.

SPY Weekly, $SPY

With January options expiration in the books, equity markets showed resilience overcoming a strong move lower midweek. Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates in a tight range. The US Dollar Index continues to drift to the downside while US Treasuries are trying to mount a short term uptrend. The Shanghai Composite is in a short term uptrend while Emerging Markets continue their trend higher.

The Volatility Index looks to remain stable in the normal range making the path easier for equity markets to the upside. Their charts also look strong on the shorter timeframe with the SPY, the QQQ and the IWM all approaching resistance. On the longer timeframe both the SPY and the QQQ are nearing a long term trend breakout with the IWM near a 5 month breakout. Use this information as you prepare for the coming week and trad’em well.

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