SPY Trends and Influencers May 8, 2021

Last week’s review of the macro market indicators saw with April in the books, equity markets continued to show strength, particularly in the larger caps. Elsewhere looked for Gold ($GLD) to pause in the reversal higher while Crude Oil ($USL) consolidated in its uptrend. The US Dollar Index ($DXY) continued to trend lower while US Treasuries ($TLT) possibly resumed their downtrend. The Shanghai Composite ($ASHR) looked to continue the slow drift sideways while Emerging Markets ($EEM) consolidated in their uptrend.

The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. Their charts looked strong, especially the $SPY and $QQQ on the longer timeframe. The $IWM remained in consolidation long term. On the shorter timeframe all three index ETFs had moved to a sideways consolidation.

The week played out with Gold holding under resistance until a surge to the upside late in the week while Crude Oil pulled back but held over support. The US Dollar met resistance and fell back to trend support while Treasuries have stalled at resistance in their bounce. The Shanghai Composite re-opened from the Labor Day Holiday on Thursday and continued to hold in consolidation while Emerging Markets found support and rose back over resistance.

Volatility met resistance and fell back mid week to end down on the week. This eased the initial pressure on equities and they responded by ending the week with a 2 day move higher. This resulted in the SPY reaching a new all-time high. The QQQ Island Reversal left it near all-time highs with the IWM printing another higher low. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just off the all-time high after a minor failed break out to the upside. It held there Monday and then gapped down to the 20 day SMA Tuesday. It held with a Hammer Candle and then rode the 20 day SMA through Thursday. It ended Thursday with a strong move higher to close the gap. Friday saw continuation to a new all-time high.

The daily chart shows that the Bollinger Bands® had squeezed in and it ended pushing that top band open with the move Friday. The RSI is rising in the bullish zone with the MACD turning to cross back higher after a reset lower. The weekly chart shows the price holding over the 161.8% extension of the retracement of the pandemic drop.

The RSI is holding just into overbought territory and strong. The MACD is rising again and big. There is no resistance above 423, and the 200% extension higher is up at 458. Support lower comes at 420 and 417.60 before 413.50 and 411 then 407 and 403 then 400.70. Uptrend.

SPY Weekly, $SPY

The first week of May is in the books, and investors started the month with a very brief sell off in the equity markets, but they did not go away. Elsewhere look for Gold to continue its move higher while Crude Oil consolidates in the uptrend. The US Dollar Index continues to the downside while US Treasuries stall in their bounce. The Shanghai Composite looks to continue to mark time moving sideways while Emerging Markets consolidate the pullback in their uptrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe, with the IWM and QQQ holding near highs while the SPY is leading to the upside. On the shorter timeframe again, the SPY is flexing while the QQQ tries to reverse to the upside and the IWM recovers. Use this information as you prepare for the coming week and trad’em well.

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