SPY Trends and Influencers June 24, 2023

Last week, the review of the macro market indicators saw with the June Quadruple Witching and FOMC meetings in the books, equity markets showed continued strength. Elsewhere looked for Gold ($GLD) to continue its consolidation under 2000 while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) continued to drift lower in the broad consolidation while US Treasuries ($TLT) also moved sideways. The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) moved up in consolidation.

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. On the shorter timeframe both the $QQQ and $SPY could us a reset on momentum measures as both were extended with the $IWM in consolidation in the new short term uptrend.

The week played out with Gold pushing to the downside while Crude Oil continued in consolidation. The US Dollar found support in the pullback while Treasuries failed in an attempted break the range bound action. The Shanghai Composite reversed and fell back to support while Emerging Markets gave back all of the gains of the past 3 weeks.

Volatility fell below the teens for the first time since January 2020. Despite this, equities could not move higher, falling 3 out of 4 days. This resulted in the SPY and QQQ closing a lot of the gap from the short term moving averages, and resetting momentum lower. The IWM has retraced to the moving average bundle and close to a retest of its recent break out level. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week seeing profit taking after printing a 14 month high. It opened lower on Tuesday and continued to drop throughout the week. Thursday it closed a gap on the daily chart from the previous week and then traded in a 2 point range Friday. This brought the price back much closer to the 20 day SMA. It also ran the RSI out of overbought territory and crossed the MACD down. These combined are positive for working off hot momentum, provided it remains above the 20 day SMA.

The weekly chart shows an inside week that takes price back within the Bollinger Bands® after 5 weeks of moves higher. The RSI on this timeframe is strong in the bullish zone with the MACD positive and rising. There is resistance at 435.50 and 437.50 then 441 and 444 before 447 and 451. Support lower comes at 430 and 428.50 then 425.50 and 423.50 before 420. Pullback in Uptrend.

SPY Weekly, $SPY

With 5 trading days left in the second Quarter, equity markets took a break, pulling back following several strong weeks. Elsewhere look for Gold to continue its pullback while Crude Oil drops in broad consolidation. The US Dollar Index continues in consolidation while US Treasuries also consolidate. The Shanghai Composite looks to continue the new short term move lower while Emerging Markets also term lower in the short term.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their SPY and QQQ charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could have now reset on momentum measures as both were extended. The IWM had the worst week giving up nearly the entire move since the breakout and looking weak on both timeframes. Use this information as you prepare for the coming week and trad’em well.

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