SPY Trends and Influencers June 10, 2023

Last week, the review of the macro market indicators saw with the month of May in the books, equity markets showed strength as they moved into June. Elsewhere looked for Gold ($GLD) to continue to retrench in the long term uptrend while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) continued to drift to the upside in consolidation while US Treasuries ($TLT) consolidated. The Shanghai Composite ($ASHR) looked to consolidate in a slow drift lower while Emerging Markets ($EEM) consolidated.

The Volatility Index ($VXX) looked to remain very low and stable as it sat at the lowest level in over 3 years, making the path easier for equity markets to the upside. Their charts looked strong, especially the $SPY and $QQQ, but now the $IWM joining them. On the shorter timeframe the QQQ was venturing into overbought territory and in need of a pause while the SPY and IWM looked ready to take over leadership if that was the case. The longer timeframe showed the SPY ready to overtake the August highs, joining the QQQ while the IWM broke a long range higher.

The week played out with Gold moving mainly sideways in consolidation while Crude Oil consolidated in the lower end of its broad range. The US Dollar met resistance at a lower high and started lower while Treasuries remained in a narrow range near the lows for the year. The Shanghai Composite held between resistance and a key moving average while Emerging Markets poked above the range that held them for the past 2 months.

Volatility dropped to levels not seen since before the pandemic, settling at a 40 month low. This relieved pressure on equities and they responded by moving higher on the week. The SPY ended at a new 52 week high, with the QQQ consolidating at 13 month highs. The IWM added to its gains ending at a 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 moving up to a more than 9 month high. It held there in consolidation most of the week, inching slightly higher on the daily chart, until a move higher Friday morning. It stalled and reversed late morning, giving back the gain, but held and turned back higher into the afternoon. It closed at a new 13 month high as it surpassed the August 2022 high Friday. The RSI on the daily chart is strong in the bullish zone with the MACD positive and rising.

The weekly chart shows follow through as price moves over the 100 week SMA. This was a new 14 month weekly high print as price follows the Bollinger Bands® to the upside. The RSI on this timeframe is rising in the bullish zone with the MACD positive and climbing. There is resistance at 430 and 435.50 then 437.50 and 441 before 444 and 447 then 451. Support lower comes at 428.50 and 425.50 then 420 and 417.50 before 413.50. Uptrend.

SPY Weekly, $SPY

Heading into the June Options Expiration and the FOMC meeting, equity markets showed strength as a change of leadership with rotation into the Large Caps and Small Caps at the expense of Tech names, but not sinking Tech stocks. Elsewhere look for the supporting cast to remain in consolidation. Gold looks to continue its consolidation in a pullback while Crude Oil consolidates in a broad range. The US Dollar Index looks to pullback in consolidation while US Treasuries churn sideways. The Shanghai Composite looks to continue in a short term consolidation while Emerging Markets consolidate in a tight 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. The SPY joined the QQQ with a move over the August 2022 high, both at the highest level in over a year, and the IWM rising out of consolidation. On the shorter timeframe the QQQ has moved to consolidation in the uptrend while the SPY and IWM continue higher. Use this information as you prepare for the coming week and trad’em well.

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