SPY Trends and Influencers May 19, 2018

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators noted heading into May options expiration week, the equity markets had regained some swagger short term, but remained in consolidation below all-time highs. Elsewhere looked for Gold ($GLD) to continue its short term bounce off of the bottom of a range while Crude Oil ($USO) continued to move higher. The US Dollar Index ($DXY) seemed to be ending its short term bounce while US Treasuries ($TLT) consolidated at recent lows.

The Shanghai Composite ($ASHR) was bouncing off of support but Emerging Markets ($EEM) continued to build a bull flag off of their January high. Volatility ($VXX) looked to continue to drift lower towards very low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts all confirmed short term uptrends during the week, making higher highs following higher lows, and looked set to continue. Longer term they still had work to do to resume the uptrend, with the IWM on the verge of that confirmation and the QQQ and SPY trailing behind.

The week played out with Gold losing support and breaking to the downside while Crude Oil was volatile but generally worked higher. The US Dollar found its footing and continued higher while Treasuries moved lower to a nearly 3 year low. The Shanghai Composite reached higher, reversed and then ended at the high of the week while Emerging Markets drifted lower over support.

Volatility held at very low levels, keeping the bias higher for equities. The Equity Index ETF’s were mixed on the week, with the SPY and QQQ consolidating over support and the IWM racing to the upside making new all-time highs. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY had just made a higher high to end the prior week. When Monday came it pushed slightly higher before pulling back. It gapped down Tuesday to the 100 day SMA and then held there the rest of the week. In all it traveled in a 4 point range, ending the week slightly lower.

The daily chart shows the RSI holding in the bullish zone and moving sideways with the MACD positive and also going sideways. The narrow range days after the move higher suggest a bull flag consolidation and a Measured Move would give a target to 283. The Bollinger Bands® have opened to allow a move as well.

On the weekly chart the pause in the uptrend suggests digestion. The RSI is trending higher off of the mid line with the MACD turning up and approaching a bullish cross. It is also positive. There is resistance higher at 272.50 and 275 then 277.50 and 279 before 280. Support lower comes at 269 and 267.50 then 265 and 262.50 before 260. Consolidation.

SPY Weekly, $SPY

With May options expiration behind and the last full trading week before Memorial Day kicks off the summer season ahead, equity markets are mixed. Elsewhere look for Gold to continue its move lower while Crude Oil continues in an uptrend. The US Dollar Index also looks to continue to move higher while US Treasuries trend lower. The Shanghai Composite looks to continue to bounce off of support and Emerging Markets remain in consolidation building there bull flag.

Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are mixed though. All look strong on the weekly timeframe. And the IWM is leading to the upside making new all-time highs. The SPY and QQQ are in consolidation short term though with the QQQ looking the weaker of the two. Use this information as you prepare for the coming week and trad’em well.

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