SPY Trends and Influencers July 1, 2023

Last week, the review of the macro market indicators saw with 5 trading days left in the 2nd Quarter, equity markets took a break, pulling back following several strong weeks. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) dropped in broad consolidation. The US Dollar Index ($DXY) continued in consolidation while US Treasuries ($TLT) also consolidated. The Shanghai Composite ($ASHR) looked to continue the new short term move lower while Emerging Markets ($EEM) also turned lower in the short term.

The Volatility Index ($VXX) looked to remain very low and stable making the path easier for equity markets to the upside. The $SPY and $QQQ charts looked strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could use a reset on momentum measures as both were extended. The $IWM had the worst week giving up nearly the entire move since the breakout and continued looking weak on both timeframes.

The week played out with Gold continuing to drift lower while Crude Oil held in a tight range over support at the lower end of consolidation. The US Dollar bounced higher in consolidation while Treasuries dropped back from resistance. The Shanghai Composite found support and managed a small rebound while Emerging Markets also found support and held in place.

Volatility jumped early but fell back the rest of the week to end little changed. This put initial pressure on equities and they responded with moves lower Monday. All quickly found support and reversed to finish the week higher. This resulted in the SPY, the IWM and the QQQ ending back near the June highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back from a 14 month high. It continued lower Monday, nearly touching the 20 SMA on the daily chart. It reversed Tuesday though and continued to move higher the rest of the week capped off with a gap up Friday and close at a new 14 month high. The RSI is rising in the bullish zone with the MACD positive and about to cross up. The gap leaves an Island below.

The weekly chart prints a strong candle moving up to the top of the Bollinger Bands®. The RSI on this timeframe is strong in the bullish zone with the MACD positive and rising. There is resistance at 444 and 447 then 451 and 454 before 457 and 460. Support lower comes at 441 and 437.50 then 435.50 and 431.50 before 430 and 428.50. Uptrend Resumes.

SPY Weekly, $SPY

With the 2nd Quarter in the books, equity markets showed strength reversing the pull backs from the prior week. Elsewhere look for Gold to continue its pullback while Crude Oil consolidates in the lower end of a broad range. The US Dollar Index continues to drift to the upside in consolidation while US Treasuries churn in their own consolidation range. The Shanghai Composite looks to continue the slow drift lower while Emerging Markets consolidate.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe with the SPY and QQQ printing new cycle weekly highs. On the shorter timeframe the QQQ, SPY and IWM all erased last week’s losses with the SPY making a new 14 month high. Use this information as you prepare for the coming week and trad’em well.

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