SPY Trends and Influencers March 23, 2024

• Posted by Greg Harmon
• on March 23rd, 2024

Last week, the review of the macro market indicators saw with the March Quadruple Witching in the books and heading into the March FOMC meeting, equity markets showed some weakness after the long run higher. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) showed short term strength. The US Dollar Index ($DXY) continued in consolidation while US Treasuries ($TLT) consolidated in their downtrend. The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) consolidated.

The Volatility Index ($VXX) looked to remain very low and stable making the path easier for equity markets to the upside. The $SPY and $QQQ charts looked strong on the longer timeframe, perhaps building bull flags. On the shorter timeframe though both were showing some weakness as they reset momentum measures lower in the bullish range. The short term weakness in the $IWM was threatening to turn into a failed break out.

The week played out with Gold consolidating in a tightening range while Crude Oil met some resistance early in the week and pulled back. The US Dollar pushed up to recent resistance while Treasuries lifted higher in consolidation. The Shanghai Composite held in a narrow range around the 200 day SMA while Emerging Markets continued in consolidation in the rising channel.

Volatility continued to move lower, breaking its rising channel to a 1 month low. This took pressure off equities and they started moving higher Tuesday. By Wednesday the SPY had set anew all-time high, following that with another Thursday. The QQQ was one day beyond making a new high on Thursday and the IWM printing a new 23 month high as well. Friday all saw some profit taking. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after pulling back to the 20 day SMA on Friday from a new all-time high 3 days earlier. It gapped up Monday and added to it Tuesday before a strong move Wednesday following the FOMC meeting saw it end at a new all-time high. Thursday printed another high with a gap up outside of the Bollinger Bands®. Friday then saw a tight range give back a small amount of the gains but move back within the Bollinger Bands. The RSI is strong in the bullish zone with the MACD crossing back up as the Bollinger Bands open higher again.

The weekly chart shows a strong move out of the short bull flag to the upside. The Bollinger Bands on this timeframe are pointing higher with the RSI strong, slightly overbought, but running flat and the MACD positive and rising. There is resistance at 524 and then the 138.2% extension of the retracement of the 2022 drop at 530 and the target on the Cup and Handle at 560. Support lower is at 520.50 and 517.50 then 513.50 and 510 before 503.50 and 501.50. Uptrend.

SPY Weekly, $SPY

With the March FOMC meeting in the books, equity markets showed strength moving higher despite the continued tone of rates staying higher for longer. Elsewhere look for Gold to continue its consolidation in a bull flag at the highs while Crude Oil continues the messy uptrend. The US Dollar Index looks to drift to the upside in consolidation while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the short term uptrend while Emerging Markets consolidate in a broad range.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe with the SPY at a weekly high and the IWM and QQQ consolidating the recent moves higher. On the shorter timeframe both the QQQ and SPY also look strong making fresh all-time highs Thursday before dropping toward filling gaps Friday on profit taking. The IWM looks to have established a higher range. Use this information as you prepare for the coming week and trad’em well.

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