SPY Trends and Influencers July 8, 2023

• Posted by Greg Harmon
• on July 8th, 2023

Last week, the review of the macro market indicators saw with the 2nd Quarter in the books, equity markets showed strength reversing the pull backs from the prior week. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) consolidated in the lower end of a broad range. The US Dollar Index ($DXY) continued to drift to the upside in consolidation while US Treasuries ($TLT) churned in their own consolidation range. The Shanghai Composite ($ASHR) looked to continue the slow drift lower while Emerging Markets ($EEM) consolidated.

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 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.

The week played out with Gold finding support and bouncing while Crude Oil rose up off the lower end of its consolidation zone. The US Dollar met resistance and pulled back while Treasuries fell back to the March low. The Shanghai Composite met resistance at a lower high and fell back while Emerging Markets also made a lower high and then dropped.

Volatility rose to a 3 week high before it fell back Friday. This put pressure on equities and they responded with a 2 day move lower following the holiday. All found support by midday Thursday and reversed. They continued higher Friday only to sell off in the afternoon and finish the week lower. This resulted in the SPY and QQQ ending just off their recent highs with the IWM below the 3 month high. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week following a gap up to end June, leaving an island below on the daily chart. It held there on Monday, printing a new 14 month high, and then gapped down Thursday. Friday it opened lower and drove to fill the gaps before fading in the afternoon and closing slightly lower on the day. This left price above the 20 day SMA on the daily chart with a RSI falling in the bullish zone and the MACD dropping but positive.

The weekly chart printed an inside week near the top of the prior week’s move. Price continues to hold along the rising Bollinger Bands® with the RSI in the bullish zone and the MACD positive and rising. There is resistance at 441 and 444 then 447 and 451 before 454 and 457. Support lower comes at 437.50 and 435.50 then 431.50 and 430 before 428.50 and 425.50. Uptrend.

SPY Weekly, $SPY

With the first week of July in the books, equity markets showed some weariness, stalling in their moves higher and giving back minor amounts. Elsewhere look for Gold to continue its downtrend while Crude Oil consolidates in a broad range. The US Dollar Index looks to move lower in consolidation while US Treasuries drop and may be resuming their downtrend. The Shanghai Composite looks to continue the intermediate trend 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 on the longer timeframe with the SPY and QQQ leading over the IWM. On the shorter timeframe both the QQQ and SPY are now in a short term consolidation with the IWM in a wider consolidation holding over the prior range. Use this information as you prepare for the coming week and trad’em well.

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