SPY Trends and Influencers March 18, 2023

• Posted by Greg Harmon
• on March 18th, 2023

Last week’s review of the macro market indicators saw heading into March options expiration, equity markets registered their worst week in months. Elsewhere looked for Gold ($GLD) to continue its move higher and possibly out of consolidation while Crude Oil ($USO) consolidated in a tightening range. The US Dollar Index ($DXY) looked to continue in consolidation while US Treasuries ($TLT) rose in their consolidation. The Shanghai Composite ($ASHR) looked to pause in its uptrend while Emerging Markets ($EEM) trended lower.

The Volatility Index ($VXX) was now slightly elevated and looked to move higher making the path more difficult for equity markets to the upside. Their charts looked damaged on the shorter timeframe, with the $IWM looking similar to capitulation. On the longer timeframe the $QQQ was holding up the best but looked better to the downside with the $SPY and $IWM nearing a test of the December low. If that happens the young uptrends were in jeopardy.

The week played out with Gold pushing to the upside and closing in on 2000 while Crude Oil broke the consolidation to the downside. The US Dollar found support in consolidation and bounced while Treasuries moved up toward the top of the broad consolidation range. The Shanghai Composite found support at the February lows while Emerging Markets dropped to fresh 4 month lows before finding support.

Volatility rose and exhibited wide range days all week ass confusion set in. This put pressure on the small caps with the IWM falling while the SPY moved sideways in a broad range and the QQQ moved higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back in a short term uptrend and under the 200 day SMA. It gapped down Monday and then recovered to fill that gap and continued higher Tuesday. Wednesday it gapped down again and then moved higher. There was strong follow through to the upside Thursday, getting it back over the 200 day SMA. It ended the week with an inside day though and under the 200 day SMA. The daily chart shows the RSI rising from a lower low but without price making a lower low. This a positive RSI Reversal and gives a target to 421. The MACD is level and negative.

The weekly chart shows a bounce up off the 38.2% retracement of the post pandemic move higher. The RSI on this timeframe is holding at the midline with the MACD level and positive. There is resistance at 391 and 394.50 then 397.50 and 400.50 before 403.50 and 405.50. Support lower comes at 389 and 386 then 382 and 380 before 376 and 373. Pullback in Short Term Uptrend.

SPY Weekly, $SPY

With the March Quad Witching in the books, equity markets showed mixed results in a volatile week. Elsewhere look for Gold to continue its uptrend while Crude Oil moves lower. The US Dollar Index continues to trend lower while US Treasuries hold in broad consolidation. The Shanghai Composite looks to consolidate while Emerging Markets move to the downside.

The Volatility Index looks to remain elevated making the path harder for equity markets to the upside. Their charts are mixed on the shorter timeframe with the QQQ showing strength while the SPY remains in a pullback and the IWM is trending lower. On the longer timeframe both the QQQ and SPY remain in a short term uptrend with the QQQ leading, while the IWM is in a sideways broad consolidation. Use this information as you prepare for the coming week and trad’em well.

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