SPY Trends and Influencers November 12, 2022

• Posted by Greg Harmon
• on November 12th, 2022

Last week’s review of the macro market indicators saw with the first week of November in the books, equity markets showed how quickly they could lose their luster. Elsewhere looked for Gold ($GLD) to pause its pullback while Crude Oil ($USO) consolidated. The US Dollar Index ($DXY) looked to consolidate in the uptrend while US Treasuries ($TLT) resumed their downtrend. The Shanghai Composite ($ASHR) looked to possibly reverse the downtrend while Emerging Markets ($EEM) continued the move lower.

The Volatility Index ($VXX) looked to continue to drift lower from an elevated level making the path slightly easier for equity markets to the upside. Their charts looked weak though on the shorter timeframe. On the longer timeframe both the $IWM and $SPY were holding up in the bounce. But the $QQQ retesting the lows looked worse.

The week played out with Gold accelerating to the upside to a higher high while Crude Oil pulled back to support and then bounced. The US Dollar broke consolidation moving sharply to the downside while Treasuries found support and moved back higher. The Shanghai Composite pulled back to support before recovering to end flat on the week while Emerging Markets popped up out of the consolidation in the downtrend.

Volatility rose early in the week but then retreated quickly to neww 2 month lows. This held initial pressure on equities but then offered a tailwind late in the week. All Index ETFs responded by rocketing to their best day in 2 years Thursday and either continuing or holding there Friday. This resulted in the SPY and IWM ending finishing at 2 month highs with the QQQ breaking 6 week resistance higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week finding support after a short pullback in a new short term uptrend. It moved slightly higher Monday and Tuesday before a strong move lower Wednesday. It did not break the prior low though. Thursday saw a gap and go with follow through to the upside Friday. This made for a short term higher high after a higher low. The daily chart shows the RSI has moved into the bullish zone with the MACD positive and rising. It may need a rest in the short term as it ended the week outside of the Bollinger Bands®.

The weekly chart printed a strong move higher, but remains short of the August high, needed to confirm a reversal. The RSI on this timeframe is rising at the midline with the MACD crossed up but negative. There is resistance at 400.50 and 403.50 then 405.50 and 407.50 before 411 and 413.50 then 417 and 420. Support lower comes at 397.50 and 394.50 then 391.50 and 389.50 before 386 and 382 then 380. Short Term Uptrend.

SPY Weekly, $SPY

Heading into November Options Expiry and the last week before the holiday season, equity markets showed exuberance as inflation data for October suggested the Fed is winning its battle. Elsewhere look for Gold to continue its move to the upside while Crude Oil consolidates. The US Dollar Index looks to continue to move lower while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets bounce in their downtrend.

The Volatility Index looks to continue its path back to the normal range making the path easier for equity markets to the upside. Their charts look much stronger, especially on the longer timeframe. On the shorter timeframe the SPY is leading the charge higher followed by the IWM . The QQ has been the laggard but is now breaking a 2 month resistance zone to the upside. Use this information as you prepare for the coming week and trad’em well.

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