SPY Trends and Influencers July 29, 2023

• Posted by Greg Harmon
• on July 29th, 2023

Last week, the review of the macro market indicators saw with the July options expiration in the books, equity markets showed some signs of tiring after a promising start to the week. Elsewhere looked for Gold to possibly reverse to the upside out of consolidation while Crude Oil consolidated in the top of a broad range. The US Dollar Index looked to bounce in the downtrend while US Treasuries continued in consolidation. The Shanghai Composite looked to continue the slow drift lower in consolidation while Emerging Markets consolidated in a tightening range.

The Volatility Index 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 both the IWM and QQQ were resetting lower and leading the SPY as they all moved back closer to their respective 20 day SMA’s.

The week played out with Gold continuing lower and testing support before a Friday bounce while Crude Oil continued higher to the top of the consolidation zone. The US Dollar moved up over prior support and held there while Treasuries retested the lows of the year and held. The Shanghai Composite gapped higher and ran toward resistance while Emerging Markets broke higher, closing at a 6 month high.

Volatility continued to hold at very low levels but with wider intraday ranges. This put intraday pressure on equities and they responded by chopping around in a range all week. All ended Thursday with bearish engulfing candles but none confirmed the reversal Friday. This resulted in the SPY ending at a 16 month high with the IWM and QQQ back at the recent highs. 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 mild pullback from a 15 month high. It started back higher Monday, made a new 15 month high Tuesday and continued higher Wednesday. Thursday it gapped higher but then sold off all day to end back near last week’s close and print a bearish engulfing candle. It did not confirm as a reversal Friday though as it moved back higher to close at nearly a 16 month high. The daily chart shows the RSI has dropped back out of overbought territory with the MACD crossed down but positive and flat. Most notable it continues to drift closer to the 20 day SMA as the accelerated move higher slows.

The weekly chart shows a third week moving higher with the highest weekly close since early January 2022 when the turn lower began. The RSI on this timeframe is strong and bullish with the MACD positive and moving higher. There is resistance at 457 and 460 then 463.50 and 466 before 470 and 471. Support lower comes at 454 and 451 then 447 and 444 before 437.50 and 435.50. Uptrend.

SPY Weekly, $SPY

With one trading day left in July, equity markets showed resilience holding up and improving in a week with rate hikes from Fed and ECB and slight loosening of the band for rates in Japan. Elsewhere look for Gold to continue its pullback while Crude Oil consolidates in the top of broad range. The US Dollar Index continues to bounce in the downtrend while US Treasuries continue their trend lower. The Shanghai Composite looks to continue the pullback in broad consolidation while Emerging Markets continue a short term move higher.

The Volatility Index looks to remain very low and stable 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 IWM look to continue in sideways channels while the SPY resumes the trend higher. Use this information as you prepare for the coming week and trad’em well.

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