SPY Trends and Influencers June 27, 2020

• Posted by Greg Harmon
• on June 27th, 2020

Last week’s review of the macro market indicators saw with June options expiration and quad witching behind, equity markets were mixed heading into the last full week of the first half. Elsewhere looked for Gold ($GLD) to continue to consolidate in the uptrend while Crude Oil ($USL) consolidated in a broad range. The US Dollar Index ($DXY) looked to move to the upside in a reversal while US Treasuries ($TLT) pulled back in their drift lower.

The Shanghai Composite ($ASHR) looked to continue the move higher in consolidation while Emerging Markets ($EEM) consolidated.  The Volatility Index ($VXX) looked to remain elevated but drifting lower making the path easier for equity markets to the upside. Their weekly charts looked strong, especially the $QQQ on the longer timeframe. On the shorter timeframe both the $IWM and $SPY had paused at the gaps from last week while the QQQ was ready for new highs.

The week played out with Gold pushing to the upside mid-week but quickly meeting resistance and dropping back followed by a bounce Friday to end slightly higher while Crude Oil also started to move higher but fell back, only without the bounce to end lower. The US Dollar pulled back to a higher low and then bounced while Treasuries jumped early then fell back but then continued up to end higher on the week. The Shanghai Composite moved higher in a short week while Emerging Markets briefly moved back over the 200 day SMA but could not hold up and fell back.

Volatility held in a tight range at elevated levels to end little changed. This kept pressure on equities and they bounced around all week, with a downward bias. The SPY continuing lower in consolidation. The IWM as well, drifting towards the bottom of a rising channel. The QQQ was perhaps the most disappointing pulling back after making a new all-time high early in the week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY had failed to close the gap down from early June and had pulled back to the 20 day SMA when the week started. It held there Monday and then tried to move up Tuesday, stalling again at the 78.6% retracement of the drop started in February. It pulled back from there the rest of the week, through the 20 and 200 day SMA’s and closing just above the 50 day SMA. This was also at the June gap down low and the big round number 300. The daily chart shows the RSI rolling lower through the mid line with the MACD falling. Both remain in the bullish zone though. The Bollinger Bands® are flat.

The weekly chart shows an inside week but with the RSI dropping back to the mid line, possibly making a lower higher. The MACD remains pushing higher and positive. Support lower comes at 300 and 297 then 294 and 291 before 287 and 285. Resistance higher sits at 302.50 and 305.50 then 309.75 and 313.50 before 320. Consolidation with Possible Reversal Lower.

SPY Weekly, $SPY

With just 2 trading days left in the first half of the year, equity markets showed profit taking and possibly more damaging activity. Elsewhere look for Gold to possibly continue its move higher while Crude Oil consolidates in the uptrend. The US Dollar Index continues to drift in sideways motion while US Treasuries move higher in their consolidation. The Shanghai Composite looks to continue to mark time as well along with Emerging Markets.

The Volatility Index looks to remain elevated and in consolidation keeping pressure on equity markets. Their charts are resetting lower, but currently without much damage on the short time frame. The longer timeframe is slightly better, but showing upper shadows for a possible retrench. Next week could give some clarity after the quarter ends. Use this information as you prepare for the coming week and trad’em well.

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