SPY Trends and Influencers June 17, 2023

Last week, the review of the macro market indicators saw heading into the June Options Expiration and the FOMC meeting, equity markets showing 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 looked for the supporting cast to remain in consolidation. Gold ($GLD) looked to continue its consolidation in a pullback while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) looked to pullback in consolidation while US Treasuries ($TLT) churned sideways. The Shanghai Composite ($ASHR) looked to continue in a short term consolidation while Emerging Markets ($EEM) consolidated in a tight range.

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. 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 rose out of consolidation. On the shorter timeframe the QQQ had moved to consolidation in the uptrend while the SPY and IWM continued higher.

The week played out with Gold continuing sideways after recovering from an intraday dip Thursday while Crude Oil found support and bounced near the bottom of its consolidation range. The US Dollar continued lower in a consolidation range while Treasuries jumped in consolidation Thursday only to meet resistance and fall back. The Shanghai Composite moved higher out of the short term consolidation while Emerging Markets broke consolidation and moved up to a 4 month high.

Volatility started higher but stalled quickly and fell back to end little changed. This allowed equities the freedom to move higher, and they all did for 2 days. All started Wednesday consolidating the move and then a divergence showed up with the small caps stalling and moving lower but tech and large caps continuing to new highs. This resulted in the SPY and QQQ ending at 14 month highs with the IWM consolidating after its recent break higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at a 13 month high after breaking above the August 2022 high. It continued higher Monday and ran through Thursday closing at a 14 month high. This was also just above the target from the move out of a Diamond consolidation. Friday saw some profit taking in the afternoon ahead of Quadruple Witching to finish the week back under 440. The daily chart shows the RSI benefited from the late Friday selloff as it moved back nearly out of overbought territory while the MACD continues higher. It also came back within the Bollinger Bands®.

The weekly chart shows a 5th positive week in a row and a move out of the Bollinger Bands. The RSI on this timeframe is strong in the bullish zone with the MACD rising and positive. This supports a thesis that any short term pullback should be short lived. There is resistance above at 441 and 444 then 447 and 451 before 454 and 457. Support lower comes at 437.50 and 435.50 then 430 and 428.50 before 425.50 and 423.50. Uptrend.

SPY Weekly, $SPY

With the June Quadruple Witching and FOMC meetings in the books, equity markets showed continued strength. Elsewhere look for Gold to continue its consolidation under 2000 while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift lower in the broad consolidation while US Treasuries also move sideways. The Shanghai Composite looks to continue the short term move higher while Emerging Markets move up in consolidation.

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. On the shorter timeframe both the QQQ and SPY could us a reset on momentum measures as both are extended with the IWM in consolidation in the new short term uptrend. Use this information as you prepare for the coming week and trad’em well.

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