SPY Trends and Influencers November 2, 2024

• Posted by Greg Harmon
• on November 2nd, 2024

Last week, the review of the macro market indicators saw with just one full week of trading to go ahead of the election and November FOMC meeting, equity markets were set to go into the week after one of choppy trading. Elsewhere looked for Gold ($GLD) to continue its uptrend while Crude Oil ($USO) consolidated at the bottom of a broad range. The US Dollar Index ($DXY) continued to move to the upside while US Treasuries ($TLT) pulled back in consolidation. The Shanghai Composite ($ASHR) looked to continue the short term move higher while Emerging Markets ($EEM) consolidated in their young uptrend.

The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. Their charts looked strong, especially on the longer timeframe. On the shorter timeframe both the $QQQ and $SPY had reset on momentum measures as they moved sideways. The $IWM continued to disappoint with another sputtered break out reversing.

The week played out with Gold ripping to a new all-time high before profit taking left it little changed on the week while Crude Oil gapped down Monday and slowly recovered through Friday. The US Dollar met resistance and consolidated at the late July high while Treasuries held in a tight range consolidating the pullback. The Shanghai Composite shifted to consolidating the move higher while Emerging Markets continued to drift lower threatening the short term uptrend.

Volatility ticked up to touch recent resistance and held. This put pressure on equities midweek and they pulled back Wednesday and Thursday before a bounce Friday. This resulted in the SPY breaking its 5 month winning streak in October and the QQQ falling just short of retesting the all-time high. The IWM continued in its own world moving mostly sideways. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week consolidating near the all-time high and above the 20 day SMA on the daily chart. It continued to hold there in a tight trading range through Wednesday. Thursday saw it gap down through the 20 day SMA and run to the 50 day SMA and lower end of the Bollinger Bands®. This was the 1st touch of the 50 day SMA in 6 weeks. It held there with an inside day Friday, a possible bottom signal. The RSI also pulled back, bouncing at the September low, and remaining in the bullish zone. The MACD is dropping but positive.

The weekly chart shows a second down week with a longer body candle. It remains well above the 20 week SMA though in healthy territory. The RSI on this timeframe is pulling back in the bullish zone with the MACD looking to cross down and positive. There is support lower at 565.50 and 556.50 then 549.50 and 545.50 before 542. Resistance higher is at 571.50 and 574.50 then 580 and 585. Pause in Uptrend.

SPY Weekly, $SPY

With October in the books and heading into the election and FOMC meeting, equity markets experienced a Halloween spooking. Elsewhere look for Gold to continue its uptrend while Crude Oil consolidates at the bottom of a broad range. The US Dollar Index looks to consolidate in its uptrend while US Treasuries pullback in their consolidation. The Shanghai Composite looks to continue the short term move higher while Emerging Markets pullback in their uptrend.

The Volatility Index looks to remain at a neutral level, above the base established this year, likely at least until after the election. This could make for choppy light trading for equity markets to start next week. Their charts look strong on the longer timeframe though. On the shorter timeframe both the QQQ and SPY have reset momentum measures lower and could reverse or turn bearish, likely a couple of days’ time will tell. The IWM does not seem concerned about an election or Fed policy churning sideways. Use this information as you prepare for the coming week and trad’em well.

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