SPY Trends and Influencers July 4, 2020

• Posted by Greg Harmon
• on July 4th, 2020

Last week’s review of the macro market indicators saw with just 2 trading days left in the first half of the year, equity markets showed profit taking and possibly more damaging activity. Elsewhere looked for Gold ($GLD) to possibly continue its move higher while Crude Oil ($USL) consolidated in the uptrend. The US Dollar Index ($DXY) continued to drift in sideways motion while US Treasuries($TLT) moved higher in their consolidation. The Shanghai Composite ($ASHR) looked to continue to mark time as well along with Emerging Markets ($EEM). 

The Volatility Index ($VXX) looked to remain elevated and in consolidation keeping pressure on equity markets. Their charts were resetting lower, but currently without much damage on the short time frame. The longer timeframe was slightly better, but showing upper shadows for a possible retrench. The next week could give some clarity, after the quarter ends.

The week played out with Gold pushing higher and hurdling the 1800 level before dropping back while Crude Oil broke to the upside and trended higher all week. The US Dollar held in a tight range all week drifting slightly lower while Treasuries jumped early but fell back later in the week to end lower. The Shanghai Composite drove higher over 3000 for the first time since March while Emerging Markets held early but ended the week moving near a 4 month high.

Volatility held early but fell back to end the week near the June lows. This took the pressure off of equities and they responded by moving higher from Tuesday through to Friday. All found support by Wednesday and reversed to finish the week little changed. This resulted in the QQQ ending at all-time highs. The SPY moved back to the June gap and IWM back to its 200 day SMA. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week below the 200 day SMA and near a retest of the June low. It dipped lower Monday but recovered, leaving a Hammer candle. That confirmed as a reversal Tuesday and it continued higher the rest of the week. It closed back at the gap and over the 20 day SMA. The daily chart shows the RSI rising but still short of making a higher high with the MACD turning towards a cross up and positive.

The weekly chart shows the push up over the high of the last two weeks but still in the broader range. The RSI is turning up off of the mid line, but short of the bullish zone with the MACD rising and now positive. There is resistance at 313.50 and 320 then 325.50 before 332. Support lower comes at 309.50 and 305.50 before 302.50 and 300 then 297. Consolidation in Uptrend.

SPY Weekly, $SPY

With the first half of the year in the books, equity markets showed renewed strength into the holiday weekend. Elsewhere look for Gold to continue higher while Crude Oil joins in a move to the upside. The US Dollar Index continues to drift lower in consolidation while US Treasuries consolidate. The Shanghai Composite looks to continue to the upside while Emerging Markets also move higher.

The Volatility Index looks to continue to move lower making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe with the QQQ leading the charge. On the shorter timeframe the QQQ is also leading with the SPY at the June gap and the IWM trailing. Use this information as you prepare for the coming week and trad’em well.

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