SPY Trends and Influencers October 19, 2019

• Posted by Greg Harmon
• on October 19th, 2019

Last week’s review of the macro market indicators saw, heading into October Options Expiration and the first week of the new earnings season, equities had caught a bid and were looking stronger on the longer timeframe. Elsewhere looked for Gold ($GLD) to continue to consolidate around 1500 while Crude Oil ($USO) bounced higher in consolidation. The US Dollar Index ($DXY) looked to pullback in the drift higher while US Treasuries ($TLT) moved lower.

The Shanghai Composite ($ASHR) was reversing to the upside and Emerging Markets ($EEM) looked to continue their short term move higher in consolidation.  Volatility ($VXXB) had eased and looked to remain very low changing the bias to higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ both broke above key resistance and looked to continue higher on the longer timeframe with a possible short term pause, while the IWM continued to churn in a wide consolidation.

The week played out for Gold bouncing along under 1500 while Crude Oil started lower but rebounded and ended the week only slightly lower. The US Dollar accelerated the move to the downside while Treasuries started higher and then gave it all back and more to finish lower on the week. The Shanghai Composite met resistance and pulled back while Emerging Markets held slightly higher.

Volatility moved slightly lower before settling, relieving the pressure on equities and putting a wind at their back. The Equity Index ETF’s reacted with a move lower early but reversed that and ended the week mostly higher. The SPY is now back at the big round number with the QQQ slightly off a retest of the all-time high, but the IWM just in the middle of the long consolidation range. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY had just printed a Shooting Star doji in a short up move as it entered the week. Confirmation would mean a reversal lower. It dropped, confirming the reversal, Monday but went no further. By Tuesday it was moving higher again and touched 300 Thursday. That triggered some profit taking at the end of the week. The daily chart shows the RSI on the edge of a move over 60 into the bullish zone, while the MACD is positive and rising. A new all-time high would confirm a new uptrend.

The weekly chart is confirming a reversal off of a higher low as it heads back to the all-time high. The RSI is lifting off the mid line and bullish with the MACD flat after pulling back. There is resistance above at 298.80 and 300 the 301 and 302 before 302.50. Support lower comes at 296.50 and 294 then 292 and 290 before 287. Tightening Consolidation.

SPY Weekly, $SPY

With October options expiration complete, equity markets had a solid week holding near recent highs with good moves higher. Elsewhere look for Gold to continue to build its bull flag around 1500 while Crude Oil consolidates. The US Dollar Index continues to move lower while US Treasuries pullback in their uptrend. The Shanghai Composite looks to pullback in consolidation while Emerging Markets pull back in their short term move higher.

Volatility has eased and looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ both broke higher to retest near the highs and look to continue to have an easier path higher. The IWM continues to churn in a wide consolidation though but put in the strongest week of the 3, perhaps finally ready to lead. Use this information as you prepare for the coming week and trad’em well.

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