SPY Trends and Influencers November 26, 2022
- Posted by Greg Harmon
- on November 26th, 2022
Last week’s review of the macro market indicators saw heading into the shortened Thanksgiving week and with November Options Expiration in the books, equity markets showed continued promise, holding up after a very strong previous week and in the wake of the repercussions following a massive failure in the cryptocurrency space. Elsewhere looked for Gold ($GLD) to continue its short term reversal lower while Crude Oil ($USO) consolidated in a downtrend. The US Dollar Index ($DXY) continued to pullback in the uptrend while US Treasuries ($TLT) bounced in their downtrend.
The Shanghai Composite ($ASHR) looked to continue the short term uptrend while Emerging Markets ($EEM) experienced a stalled bounce in the downtrend. The Volatility Index ($VXX) looked to continue towards normal levels making the path easier for equity markets to the upside. Their charts looked decent on the shorter timeframe with wide paths higher in the $SPY and $IWM but a consolidation over prior resistance on the $QQQ. On the longer timeframe the nascent moves higher were far short of confirming a reversal.
The week played out with Gold continuing lower then finding support mid week and bouncing while Crude Oil dropped to the bottom of the consolidation range, retesting the September low. The US Dollar Index continued lower, nearing the August lows while Treasuries continued their move to the upside. The Shanghai Composite stalled as it hit long term resistance in the move higher while Emerging Markets consolidated their recent move higher.
Volatility continued to move lower ending near the lows of the year. This removed pressure from equities and they responded by moving higher all week. This resulted in the SPY ending at a 2 month high while the QQQ held over the recent breakout with the IWM lagging despite having a great week as well. What does this mean for the coming week? Let’s look at some charts.
SPY Daily, $SPY
The SPY came into the week in consolidation, building a bull flag after a leg higher. It held there Monday and then started to move higher. It continued higher the rest of the week, confirming another higher low and ending with a higher high. The 200 day SMA looms nearby overhead on the daily chart as the price moves higher along the skyward reaching Bollinger Bands®. The RSI is rising in the bullish zone with the MACD positive and moving higher as well.
The weekly chart shows last week’s indecision candle resolving to the upside. The Bollinger Bands on this timeframe remain flat, but there is still a lot of upside room to the top of them. The RSI on this timeframe is rising through the midline with the MACD moving higher but negative.
There is resistance higher at 403.50 and 405.50 then 407.50 and 411 followed by 413.50 and 417.50 then 420. It will take a close over 430 before we can start to think about the bear market being over. Support lower comes at 400.50 and 397.50 then 394.50 and 391.50 before 389.50 and 386 then 382. Short Term Uptrend.
SPY Weekly, $SPY
Heading into the last month of the year, equity markets showed continued strength as they continued higher. Elsewhere look for Gold to continue to digest its move to the upside while Crude Oil continues lower. The US Dollar Index continues to move to the downside while US Treasuries bounce in their downtrend. The Shanghai Composite looks to pause in its short term uptrend while Emerging Markets bounce in their downtrend.
The Volatility Index is back at normal levels making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe with the SPY leading the charge higher. On the shorter timeframe things look messier with both the QQQ and IWM in a consolidation while the SPY breaks higher. Use this information as you prepare for the coming week and trad’em well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)