SPY Trends and Influencers October 23,2021

• Posted by Greg Harmon
• on October 23rd, 2021

Last week’s review of the macro market indicators saw with the October options expiration in the books, equity markets showed signs of a rebound from an ugly 10 week stretch. Elsewhere looked for Gold ($GLD) to continue in consolidation while Crude Oil ($USL) continued in an uptrend. The US Dollar Index ($DXY) continued its short term move to the upside while US Treasuries ($TLT) were in position to possible reverse to the upside. The Shanghai Composite ($ASHR) looked to continue the broad drift sideways while Emerging Markets($EEM) trended lower.

The Volatility Index ($VXX) looked to remain very low making the path easier for equity markets to the upside. The charts of the $SPY and $QQQ looked strong, especially on the longer timeframe where they were showing signs of a resumption of the long uptrend. On the shorter timeframe both the QQQ and SPY still had some work to do but were also looking promising. The $IWM however remained in the long consolidation with no signs of that changing.

The week played out with Gold rising off of support in consolidation while Crude Oil spent the week chopping around in a wide range at the highs. The US Dollar drifted down to the August lows in its bull flag while Treasuries fell back from a lower high. The Shanghai Composite inched higher while Emerging Markets rolled over at another lower high.

Volatility fell back to the July lows and settled. This put the wind at the backs of equities and they responded by moving higher all week. Friday saw profit taking across the board, hitting the QQQ and IWM the hardest. This resulted in the SPY ending back off the new all-time highs, with the QQQ stalling short of a new high and the IWM stalled near the top of the range for the past 3 months. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week moving higher off a short term higher low in the rebound. It was sitting on top of the 50 day SMA and had pushed the Bollinger Bands® open. It continued higher Monday with follow through to a new all-time high Thursday. Friday it saw some midday profit taking and then rebounded to close slightly lower. The daily chart shows the pause around the prior high with the RSI starting to level in the bullish zone and the MACD rising and positive.

The weekly chart shows the pause is also near the 200% extension of the retracement of the pandemic drop. The RSI on this timeframe is rising in the bullish zone with the MACD flat and positive after a pullback. There is no resistance above 455. Support lower comes at 450 and 447 then 444 and 441 before 437.50 and 436 then 430.50. Uptrend.

SPY Weekly, $SPY

With one week left in October, equity markets showed continued strength. Elsewhere look for Gold to continue its short term consolidation while Crude Oil continues in an uptrend. The US Dollar Index to pullback in the short term uptrend while US Treasuries consolidate in the downtrend. The Shanghai Composite looks to continue to mark time in a broad range while Emerging Markets pullback in a long term uptrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. The charts of the SPY and QQQ continue to look strong, especially on the longer timeframe. On the shorter timeframe the QQQ looks in for a pause. The IWM remains stuck in broad consolidation but with some positive progress at the top of the recent range. Use this information as you prepare for the coming week and trad’em well.

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