SPY Trends and Influencers November 21, 2020

Last week’s review of the macro market indicators saw heading into November options expiration, equity markets were showing some rotation in leadership from the Nasdaq to the small caps. Elsewhere looked for Gold ($GLD) to consolidate in the uptrend while Crude Oil ($USL) consolidated in a broad range. The US Dollar Index ($DXY) continued to drift at the low end of consolidation while US Treasuries ($TLT) trended lower. The Shanghai Composite ($ASHR) looked to continue in consolidation while Emerging Markets ($EEM) consolidated are in an uptrend.

The Volatility Index ($VXX) looked to continue to drift lower making the path easier for equity markets to the upside. Their charts were holding firm, especially on the longer timeframe. On the shorter timeframe the $IWM looked the strongest making a new all-time high with the $SPY starting to move up as well. The $QQQ seemed stuck at the big round number in consolidation.

The week played out with Gold drifting lower in the bull flag before a rebound Friday while Crude Oil peaked over the top of the consolidation range. The US Dollar found pulled back to support in place since August while Treasuries rose within the downtrend. The Shanghai Composite lifted higher off of the 20 day SMA while Emerging Markets moved up to 22 month highs and consolidated.

Volatility continued down to the August lows in a narrow range. This took the pressure off of equities and they responded by starting the week with a move higher Monday. But that was all the power they had and they stalled out. The SPY gave back the gains while the QQQ and the IWM fared much better holding on to the move higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week at an all-time high. It gapped up Monday to a new high and then drifted lower all week, building a bull flag. The daily chart shows that price continues to hold over the symmetrical triangle break out from last week. The Bollinger Bands® continue to open higher with the RSI pulling back in the bullish zone and the MACD leveling and positive.

The weekly chart shows a move back towards the breakout level and at the top of the rising Bollinger Bands®. The RSI is holding in the bullish zone with the MACD rising and positive. There is resistance at 358 and 364. Support lower comes at 353 and 348.80 then 346 and 344.70 before 342.20. Short Term Consolidation in Uptrend.

SPY Weekly, $SPY

Heading into the shortened holiday weekend equity markets have paused to catch their breath. Elsewhere look for Gold to continue in consolidation while Crude Oil continues a short term uptrend in a broad range. The US Dollar Index looks to consolidate at the bottom of a broad range while US Treasuries are showing a possible reversal higher. The Shanghai Composite looks to continue to mark time moving sideways while Emerging Markets move higher in an uptrend.

The Volatility Index looks to continue to drift lower making the path easier for equity markets to the upside. Their charts continue to look strong, especially on the longer timeframe as they hold at highs. On the shorter timeframe both the QQQ and SPY are in consolidation mode moving sideways while the IWM looks stronger moving up. Use this information as you prepare for the coming week and trad’em well.

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