SPY Trends and Influencers June 3, 2023

Last week, the review of the macro market indicators saw heading into Memorial Day Weekend and the start of summer trading, equity markets were mixed with Tech and Large Caps showing strength while Small Caps languished sideways. Elsewhere looked for Gold ($GLD) to continue its pullback in the uptrend while Crude Oil ($USO) consolidated in a broad range. The US Dollar Index ($DXY) continued to drift to the upside while US Treasuries ($TLT) pulled back in consolidation. The Shanghai Composite ($ASHR) looked to continue a short term move lower while Emerging Markets ($EEM) consolidated.

The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. The charts of the $SPY and $QQQ looked strong, especially on the longer timeframe. On the shorter timeframe the QQQ was strong as well with the SPY breaking out to join it. The $IWM continued to be the problem child moving sideways for over 2 months now.

The week played out with Gold finding support and reversing back toward 2000 while Crude Oil tested the bottom of the consolidation range before bouncing late in the week. The US Dollar met resistance at a lower high and rolled over while Treasuries found support and moved back higher. The Shanghai Composite found support and consolidated while Emerging Markets rose to the top of the consolidation range.

Volatility fell back, dropping to 39 month lows at the end of the week. This put a breeze at the backs of the equity index ETFs and they responded with a 2 day move higher to finish the week. This resulted in the SPY reaching a 9 month high and the QQQ ending at a 14 month high. The IWM finally broke above the top of the 3 month consolidation range. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week moving back to the May high. It probed higher Tuesday but could not hold up and pulled back. It dropped slightly on Wednesday day as well but held over support on the daily chart. Thursday it had a strong move higher and continued Friday to end at a new 9 month high. The daily chart shows the RSI rising in the bullish zone with the MACD positive and climbing.

The weekly chart shows a strong move higher over the 100 week SMA following the Bollinger Bands® higher. The RSI on this timeframe is rising in the bullish zone as well with the MACD positive and climbing. There is resistance higher at 428.50 and 430 then 435.50 and 437.50 before 441 and 444. Support lower comes at 425.50 and 423.50 before 420 and 417.50 then 413.50 and 411. Uptrend.

SPY Weekly, $SPY

With the month of May in the books, equity markets showed strength as they moved into June. Elsewhere look for Gold to continue to retrench in the long term uptrend while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the upside in consolidation while US Treasuries consolidate. The Shanghai Composite looks to consolidate in a slow drift lower while Emerging Markets consolidate.

The Volatility Index looks to remain very low and stable as it sits at the lowest level in over 3 years, making the path easier for equity markets to the upside. Their charts look strong, especially the SPY and QQQ, but now the IWM joining them. On the shorter timeframe the QQQ is venturing into overbought territory and may need a pause while the SPY and IWM look ready to take over leadership if that is the case. The longer timeframe shows the SPY ready to overtake the August highs, joining the QQQ while the IWM breaks a long range higher. Use this information as you prepare for the coming week and trad’em well.

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