SPY Trends and Influencers June 20, 2020

• Posted by Greg Harmon
• on June 20th, 2020

Last week’s review of the macro market indicators saw heading into the June options expiration week, equity markets had shown some weakness with their turn lower at the end of the week following the FOMC meeting. Elsewhere looked for Gold ($GLD) to consolidate in its uptrend while Crude Oil ($USL) paused in its move higher. The US Dollar Index (DXY) looked to be ready to reverse to the upside while US Treasuries ($TLT) also could reverse higher. The Shanghai Composite ($ASHR) looked to continue to mark time moving sideways while Emerging Markets ($EEM) consolidated in their uptrend.

The Volatility Index ($VXX) looked to be reversing higher making the path harder for equity markets to the upside. Their charts looked to have been punched in the face, especially on the shorter timeframe. All were holding over the 20 day SMA for now, so no major damage, but it was time to take notice. On the longer timeframe the long red bearish engulfing candles for both the $IWM and $SPY showed some damage. The $QQQ remained the strongest but with a potential reversal candle itself too.

The week played out with Gold moving in a tight range until pushing to the upside Friday while Crude Oil found support after a small drop and drifted back higher. The US Dollar continued to move higher but slowly while Treasuries dropped from another lower high. The Shanghai Composite found support and started higher in consolidation while Emerging Markets also found support and started to move back higher.

Volatility had a hiccup early Monday but fell back and then drifted lower all week. This put initial pressure on equities but they recovered the Monday gap down and moved higher. All remained little changed the rest of the week. This resulted in the IWM filling the Monday gap while the SPY moved sideways with it still open. The QQQ rose to retest the all-time high. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY entered the week sitting on the 200 day SMA and off of the mid-week highs. It gapped down Monday but drove higher all day to finish up on the day over the 20 day SMA. Tuesday saw a gap up to the 78.6% retracement of the major drop and then it slowly drifted lower the rest of the week back to the 20 day SMA. The RSI is holding in the bullish zone on the daily chart, but might have made a lower higher with the MACD flat and positive.

The weekly chart shows a strong move higher off of the 20 week SMA. This timeframe has the RSI trending higher below the bullish zone with the MACD rising and mow positive. There is resistance above at 309.75 before 313.50 and 320 then 325.50 and 332 before 339. Below there is support at 305.50 and 302.50 then 300 and 297. Pause in Uptrend.

SPY Weekly, $SPY

With June options expiration and quad witching behind, equity markets are mixed heading into the last full week of the first half. Elsewhere look for Gold to continue to consolidate in the uptrend while Crude Oil consolidates in a broad range. The US Dollar Index looks to move to the upside in a reversal while US Treasuries pullback in their drift lower. The Shanghai Composite looks to continue the move higher in consolidation while Emerging Markets consolidate.

The Volatility Index looks to remain elevated but drifting lower making the path easier for equity markets to the upside. Their weekly charts look strong, especially the QQQ on the longer timeframe. On the shorter timeframe both the IWM and SPY have paused at the gaps from last week while the QQQ is ready for new highs. Use this information as you prepare for the coming week and trad’em well.

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