SPY Trends and Influencers November 4, 2023

Last week, the review of the macro market indicators saw with just 2 trading days left in October and an FOMC meeting next week, equity markets were pressing to move past a correction to something bigger. Elsewhere looked for Gold ($GLD) to continue its assault on $2000 while Crude Oil ($USO) consolidated. The US Dollar Index ($DXY) continued to consolidate the move to the upside while US Treasuries ($TLT) continued in their downtrend.

The Shanghai Composite ($ASHR) looked better lower while Emerging Markets ($EEM) also remained in a downtrend. The Volatility Index ($VXX) looked to remain at moderate levels, but rising, making the path easier for equity markets to the downside. Their charts looked weak, especially the $IWM and the $SPY. The $QQQ had also changed to looking better lower as the big news of the week.

The week played out with Gold breaking above $2000 and holding through Tuesday before profit taking while Crude Oil pressed higher early in the week but could not hold up and retraced. The US Dollar looked to have cracked support in consolidation Friday while Treasuries consolidated early and then rocketed higher after the Fed announcement Wednesday afternoon.

The Shanghai Composite held under the SMA in its bounce while Emerging Markets drove up to the October high after the Fed meeting. Volatility moved sharply lower. This put the wind at the backs of equities and they responded with a 5 day move higher. This resulted in the SPY, IWM and QQQ ending near the October highs. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in a downtrend. It was now more than 10% off the July high and at a 5 month low. It caught a bid Monday through and then rose Tuesday as well. Wednesday it was back at the 200 day SMA and kept going Thursday and Friday for a 5 day rally. This move had it end just shy of the early October highs. The RSI on the daily chart is on the edge of a move back into the bullish zone with the MACD crossed up and rising but negative.

The weekly chart shows the highest weekly close since early September. The RSI caught itself at the bottom of the bullish zone and reversed now over the midline with the MACD also catching itself before turning negative. There is resistance at 435 and 437.50 then 444 and 447 before 451 and 454. A move over 437.50 in the short term will have more bulls join in. Support lower comes at 430 and 428.50 then 425.50 and 423.50 before 420 and 417.50. Short Term Uptrend.

SPY Weekly, $SPY

With just 2 months left in the year, equity markets showed strength with a strong rebound after a weak October. Elsewhere look for Gold to continue to consolidate at the highs while Crude Oil enters a short term downtrend. The US Dollar Index is in a possible reversal lower while US Treasuries bounce in their downtrend. The Shanghai Composite and Emerging Markets both look to continue their bounces in their downtrends.

The Volatility Index looks to remain low after a sharp reversal making the path easier for equity markets to the upside. Their charts also look strong, especially on the shorter timeframe with strong volume breakaway moves higher. On the longer timeframe both the QQQ and SPY are on the cusp of reversals while the IWM also looks strong. Use this information as you prepare for the coming week and trad’em well.

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