SPY Trends and Influencers October 14, 2023

• Posted by Greg Harmon
• on October 14th, 2023

Last week, the review of the macro market indicators saw with the first full week of October in the books, equity markets showed resilience as they found support and reversed after a continued move lower. Elsewhere looked for Gold ($GLD) to continue its downtrend while Crude Oil ($USO) continued in the fast short term move lower. The US Dollar Index ($DXY) continued in an uptrend but on a three day losing streak while US Treasuries ($TLT) trended lower. The Shanghai Composite ($ASHR) looked to reopen after a week off continuing the bias to the downside while Emerging Markets ($EEM) sat at support in consolidation.

The Volatility Index ($VXX) looked to remain low making the path easier for equity markets to the upside. Their charts had improved on the shorter timeframe but in what could still turn out to be an oversold bounce. On the longer timeframe both the $QQQ and $SPY were printing bottoming candles. The $IWM continued to run its own race in a broad but tightening consolidation.

The week played out with Gold finding support and ripping to the upside while Crude Oil gapped up, closed then gap then rose again. The US Dollar extended the downturn to 6 days before reversing at the end of the week while Treasuries found support and rose off last week’s low. The Shanghai Composite continued lower to the August support level and held while Emerging Markets held in a tight range finishing slightly higher.

Volatility drifted lower early and then rebounded Friday to finish slightly higher. This removed pressure from equities and they responded by starting the week with a 3 day move higher. The SPY and QQQ started higher Thursday but gave up ground in the afternoon and then again Friday to finish little changed on the week. The IWM gave up all the gains Thursday and finished down for the week. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week bouncing off the 200 day SMA on the daily chart. It continued to move higher through Wednesday and then stalled. It started to move lower intraday Thursday and then dropped again on Friday, after a gap up at the open. It ended the week on the positive side though. The RSI reached the midline but then stalled and knocked back with the MACD rising but negative.

The weekly chart shows continuation higher off a bottom, albeit with a small move. The RSI on this timeframe is holding at the midline in the bullish zone with the MACD dropping but positive. There is support lower at 430 and 428.50 then 425.50 and 423.50 before 420 and 417.50. Resistance higher is at 435.50 and 437.50 then 444 and 447 before 415 and 454. Consolidation in Short Term Downtrend.

SPY Weekly, $SPY

Heading into the heart of earnings season, equity markets showed early strength but got spooked at the end of the week, giving up most or all of their gains. Elsewhere look for Gold to continue its possible reversal to the upside while Crude Oil drives higher as well. The US Dollar Index looks to continue to move to the upside while US Treasuries settle in their uptrend. The Shanghai Composite looks to continue lower while Emerging Markets consolidate over long term support.

The Volatility Index looks to remain low but with a bias higher, making the path more difficult for equity markets to the upside. Their charts look weak on the shorter timeframe with late week reversals from lower highs continuing short term downtrends. On the longer timeframe both the QQQ and SPY are holding in bullish ranges with momentum gauges reset and ready to move back higher. The IWM continues in consolidation on that timeframe though. Use this information as you prepare for the coming week and trad’em well.

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