SPY Trends and Influencers November 14, 2020

Last week’s review of the macro market indicators saw the first week of November was an eventful one with a Presidential election that was still unresolved, a FOMC meeting and a non-farm payrolls report to attack markets, and they reacted like champs with an impressive move to the upside all week. Elsewhere looked for Gold ($GLD) to continue its move higher while Crude Oil ($USL) consolidated in a broad range. The US Dollar Index ($DXY) looked to move lower in consolidation while US Treasuries ($TLT) remained in a downtrend.

The Shanghai Composite ($ASHR) looked to continue to consolidate while Emerging Markets ($EEM) broke out to the upside. The Volatility Index ($VXX) was moving back to a normal range making the path easier for equity markets to the upside. Their charts looked strong, especially on the shorter timeframe. On the longer timeframe both the $QQQ and $SPY were back at resistance at all-time highs with the $IWM trending higher towards its best print.

The week played out with Gold getting slammed Monday and then consolidating all week while Crude Oil moved to test the top of the range before pulling back. The US Dollar found support and bounced while Treasuries fell hard Monday and spent the week retracing the gap. The Shanghai Composite made a slightly higher high before pulling in all week while Emerging Markets held at recent highs after an aborted break higher.

Volatility continued its drift down, ending at 10 week lows. This should have relieved the pressure on equities and they responded by starting the week with a large gap up. But none could hold the highs Monday and they then settled in the rest of the week. The SPY is now holding after closing the gap while the IWM holds above its gap and the QQQ sits just under last Friday’s close. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week stalling in a move higher at what could be a second lower high, building a symmetrical triangle. It exploded higher Monday with a big gap up. It then sold off all day to finish only slightly higher. With big volume it looked like a blow off top. But it held there Tuesday, over the triangle and consolidated the rest of the week. Friday saw an afternoon drift higher and it closed at a new all-time high. The daily chart shows the triangle break, giving a target to 390. The Bollinger Bands® are also opening as the price moves up. The RSI is holding firmly in the bullish zone with the MACD rising and positive.

The weekly chart shows a potential Hanging Man candle as price breaks above the ascending triangle. The RSI is rising in the bullish zone with the MACD turning up and near highs. The Bollinger Bands are rising on this timeframe as well. There is resistance at 364. Support lower comes at 358 and 353 then 348.80 and 346 followed by 344.70 and 342.20. Renewing Uptrend.

SPY Weekly, $SPY

Heading into November options expiration, equity markets are showing some rotation in leadership from the Nasdaq to the small caps. Elsewhere look for Gold to consolidate in the uptrend while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift at the low end of consolidation while US Treasuries trend lower. The Shanghai Composite looks to continue in consolidation while Emerging Markets consolidate are in an uptrend.

The Volatility Index looks to continue to drift lower making the path easier for equity markets to the upside. Their charts are holding firm, especially on the longer timeframe. On the shorter timeframe the IWM looks the strongest making a new all-time high with the SPY starting to move up as well. The QQQ seems stuck at the big round number in consolidation. Use this information as you prepare for the coming week and trad’em well.

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