SPY Trends and Influencers July 22, 2023

• Posted by Greg Harmon
• on July 22nd, 2023

Last week, the review of the macro market indicators saw heading into July options expiration, equity markets showed strength moving higher all week until some profit taking Friday. Elsewhere looked for Gold ($GLD) to possibly reverse higher while Crude Oil ($USO) rises in consolidation. The US Dollar Index ($DXY) broke through support and looked to continue lower while US Treasuries ($TLT) remained in consolidation.

The Shanghai Composite ($ASHR) looked to continue consolidation as well while Emerging Markets ($EEM) continued a short term move higher. The Volatility Index ($VXX) looked to remain very 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 $IWM, the $QQQ and $SPY all broke clear of short term consolidation and had upside room.

The week played out with Gold driving to the upside but meeting resistance and dropping back late in the week while Crude Oil started the week lower but recovered most of the ground by Friday. The US Dollar offered a failed breakdown as it rallied all week while Treasuries moved higher in consolidation. The Shanghai Composite moved lower in consolidation while Emerging Markets also gave up their recent gains.

Volatility held at the recent lows though, in a less than 1 point range all week. This set up for equities to continue their moves higher and they did through early Wednesday before retreating. All continued the fall back on Thursday led by the QQQ and then retested the Thursday low on Friday. This resulted in the SPY and IWM up slightly on the week while the QQQ ended in negative territory. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in a solid uptrend on both the short term and long term charts. It printed 3 new highs the first three days of the week on the daily chart, ending with a doji star Wednesday. This confirmed lower Thursday and then it held with an inside day Friday. Price is extended from the 20 day SMA so more downside is certainly possible without jeopardizing the uptrend. The RSI has pulled back out of overbought territory in the bullish zone with the MACD flat and positive.

The weekly chart shows a strong trend higher off the March low. Price continues to ride the upper of the Bollinger Bands® with the RSI strong in the bullish zone and the MACD positive and rising. There is resistance at 454 and 457 then 460 and 463.50 before 466 and 470. Support lower comes at 451 and 447 then 444 and 441 before 437.50 and 435.50. Uptrend.

SPY Weekly, $SPY

With the July options expiration in the books, equity markets showed some signs of tiring after a promising start to the week. Elsewhere look for Gold to possibly reverse to the upside out of consolidation while Crude Oil consolidates in the top of a broad range. The US Dollar Index looks to bounce in the downtrend while US Treasuries continue in consolidation. The Shanghai Composite looks to continue the slow drift lower in consolidation while Emerging Markets consolidate in a tightening range.

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. On the shorter timeframe both the IWM and QQQ are resetting lower and leading the SPY as they all move back closer to their respective 20 day SMA’s. Use this information as you prepare for the coming week and trad’em well.

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