SPY Trends and Influencers June 12, 2021

Last week’s review of the macro market indicators saw summer had unofficially begun with the passing of Memorial Day, and equity markets ended the week stronger after large caps rebounded from a weak start. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USL) moved to new multi-year highs. The US Dollar Index ($DXY) and US Treasuries ($TLT) continued to consolidate in their downtrends. The Shanghai Composite ($ASHR) looked ready to continue higher while Emerging Markets ($EEM) resumed their uptrend.

The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts showed moves to the top of consolidation ranges on both timeframes. The $QQQ looked the most promising on the shorter timeframe with the $SPY next and the $IWM building a tight pattern. On the longer timeframe all three were consolidating with strong momentum.

The week played out with Gold trading in a range around the big round number 1900 and dropping back while Crude Oil continued higher at 32 month highs. The US Dollar continued to hover over support while Treasuries broke out higher to 3½ month highs. The Shanghai Composite continued to move sideways under resistance while Emerging Markets drifted lower towards closing the gap.

Volatility fell back to post pandemic lows after an early small bounce. This gave large cap equities added energy and they responded with moves up to the all-time high area late in the week. This seems to have come at the expense of small caps, which started the week rising and then retreated as the large caps gained. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at an all-time high as the Friday close just topped the May previous high. It held in a very narrow range early, as the Volatility Index stopped falling and then made a new high Thursday. It ended the week with another narrow range day and a new high. The Bollinger Bands® on the daily chart are running sideways with a slight upward slope now and a little room above.

The daily chart shows the RSI running along flat in the bullish zone with the MACD also very flat and positive. The 50, 100, 150 and 200 day SMA’s running higher in parallel make for a beautiful chart. On the weekly chart there is a renewed move higher after the retest at the 161.8% extension of the retracement of the pandemic drop. The Bollinger Bands are running higher on this timeframe with the 50 and 100 week SMA’s rising to join.

The RSI is moving sideways along the edge of being overbought, a great thing for this timeframe. The MACD is kissing the signal line, wondering if it will cross down and reset lower or reverse higher. There is no resistance above 424.60 but a target from a Positive RSI Reversal at 443 and the 200% extension at 458 above that. Support below comes at 423 and 420 then 417.40 and 413.75 before 411 and 407 then 403 and 400.70. Uptrend.

SPY Weekly, $SPY

Heading into the June options expiration week, equity markets are revving their engines and heating up as they drift around all-time highs. Elsewhere look for Gold to consolidate around 1900 while Crude Oil breaks higher. The US Dollar Index remains consolidating from the downtrend while US Treasuries started a nascent move to the upside. The Shanghai Composite looks to continue to consolidate the break higher while Emerging Markets stick in broad consolidation over the long term range.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe with the SPY leading the way. On the shorter timeframe all 3 are breaking higher, with the SPY at all-time highs. The QQQ is trending higher and less than $1 from its high while the IWM breaks a long consolidation pattern less than $3 from its high. Use this information as you prepare for the coming week and trad’em well.

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