SPY Trends and Influencers May 23, 2020

• Posted by Greg Harmon
• on May 23rd, 2020

Last week’s review of the macro market indicators saw with May options expiration in the record books, equity markets seemed to have weathered a short term storm. Elsewhere looked for Gold ($GLD) to continue to move higher while Crude Oil ($USL) retraced its downward move. The US Dollar Index ($DXY) looked to possibly break to the upside while US Treasuries ($TLT) consolidated in their uptrend. The Shanghai Composite ($ASHR) looked to slowly drift higher in consolidation while Emerging Markets ($EEM) paused under short term resistance. 

The Volatility Index ($VXX) looked to remain elevated but moving lower making the path easier for equity markets to the upside. Their charts were a mixed bag, with the $SPY and $IWM in consolidation on the shorter timeframe while the $QQQ looked to head higher. On the longer timeframe both the QQQ and SPY looked strong as they moved higher, but with resistance just overhead. The IWM was also at resistance but at relatively lower levels. 

The week played out with Gold opening to the upside but reversing quickly and ending the week moving lower while Crude Oil moved up early and held the gains. The US Dollar pulled back to the bottom of consolidation and bounced while Treasuries gapped down Monday and drifted higher the rest of the week, but left the gap open. The Shanghai Composite reversed to the downside while Emerging Markets started higher with a gap up but closed it by Friday after falling back.

Volatility drifted lower early and then held to end the week slightly lower. This gave equities a boost Monday and they all gapped higher. But Monday was the end of the move and they held in what is recently considered a narrow range. What does this mean for the coming holiday shortened week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at the 20 day SMA and rising off of a retest at the 50% retracement of the down move. It gapped higher Monday, over the 61.8% retracement, and then held there the rest of the week. This is also just under the 200 day SMA. The daily chart shows the RSI running flat right at the edge of the bullish zone with the MACD flat and positive. The Bollinger Bands® are running flat as well.

The weekly chart shows the highest weekly close since the start of March and price back over the 200 week SMA. The RSI is cracking over the mid line with the MACD crossed up but negative. There is resistance at 297 and 300 then 302.50 and 305.50 before 309.75 and 313.50. Support lower comes at 294 and 291 then 287 and 285 before 281. Possibly Breaking Short Term Consolidation Higher.

SPY Weekly, $SPY

Heading into the Memorial Day Weekend and unofficial start of summer, equity markets posted a strong week with signs of potential range breaks to come. Elsewhere look for Gold to continue to consolidate while Crude Oil moves to the upside. The US Dollar Index continues to churn sideways while US Treasuries consolidate as well. The Shanghai Composite looks to be reversing lower while Emerging Markets consolidate under resistance.

The Volatility Index looks to remain elevated and drifting lower easing the roadblocks in front of equity markets. Their charts are looking a bit stronger on the shorter timeframe and possibly on the edge of breaking consolidation to the upside. The one exception to this is the QQQ which is in a full blown uptrend. On the longer timeframe all 3 Index ETF’s look strong. Use this information as you prepare for the coming week and trad’em well.

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