SPY Trends and Influencers July 6, 2019

• Posted by Greg Harmon
• on July 6th, 2019

Last week’s review of the macro market indicators saw as the 2nd Quarter closed, equity markets had regained some of their swagger with a couple of positive days. Elsewhere looked for Gold ($GLD) to possibly pause in its uptrend while Crude Oil ($USO) continued higher. The US Dollar Index ($DXY) continued in the short term downtrend while US Treasuries ($TLT) remained in their uptrend.

The Shanghai Composite ($ASHR) looked to break consolidation around the round number 3000 and resume the uptrend while Emerging Markets ($EEM) remained in a short term uptrend.  Volatility ($VXXB) looked to remain low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed renewed strength from the IWM with the SPY trying to follow, but a bit less confidence from the QQQ. Perhaps a shift in leadership coming.

The week played out with the jobs report playing a big role. Gold pressed higher early only to fall back near unchanged by weeks end while Crude Oil met resistance and saw some selling. The US Dollar rose out of support, moving slightly higher while Treasuries ran higher but were rocked Friday. The Shanghai Composite gapped higher Monday but drifted lower all week while Emerging Markets ran a similar path, popping and dropping.

Volatility dropped into the low teens, before a bounce, keeping the bias higher for equities until a shift Friday. The Equity Index ETF’s produced gaps higher Monday that eroded but then closed Wednesday ahead of the holiday with a strong push higher. Much of that push was lost Friday though. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY entered the week reversing after a short pullback that followed a new all-time high. It gapped up Monday and moved slightly higher Tuesday to a new all-time high close. Wednesday saw a second gap up and move to another new all-time high close. It started Friday after the holiday selling off but reversed about an hour and a half into the session to recover the bulk of the losses.

It finished the week at a new weekly all-time high. The daily chart shows the Bollinger Bands® have shifted higher. The RSI is running along the edge of overbought deep in the bullish zone. And the MACD is rising and positive. Prior resistance has held as support as well. A very positive looking chart.

The weekly chart shows the push over prior resistance. This also triggers a Cup and Handle with a target to 354. It also has a Measured Move off of the December low to 333. The RSI is rising and bullish with the MACD crossed up, rising and positive. There is no resistance higher. Support below comes at 296.75 and 295 then 294 and 292 before 290 and 287. Uptrend.

SPY Weekly, $SPY

Heading into the heat of summer and earnings season, the equity markets are a bit mixed but all strong on the shorter timeframe. Elsewhere look for Gold to pause in its uptrend, holding around 1400, while Crude Oil pauses in the pullback. The US Dollar Index looks to reverse higher in consolidation while US Treasuries pullback in their uptrend. The Shanghai Composite looks to continue the messy uptrend while Emerging Markets stall in their move higher.

Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their short term charts are all positive looking for more upside. But on the longer timeframe the SPY and QQQ are decidedly more bullish, triggering patterns with very big potential moves, while the IWM remains stuck in a range. Use this information as you prepare for the coming week and trad’em well.

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