SPY Trends and Influencers October 29, 2022

Last week’s review of the macro market indicators saw with the October options expiration in the books, equity markets showed strength to end the week, continuing higher off the new lows from the prior week. Elsewhere looked for Gold ($GLD) to continue hold at support in a pullback while Crude Oil ($USO) consolidated in a downtrend. The US Dollar Index ($DXY) continued to hold at resistance in the uptrend while US Treasuries ($TLT) continued their downtrend. The Shanghai Composite ($ASHR) looked to pause in its move higher while Emerging Markets ($EEM) continued their downtrend.

The Volatility Index ($VXX) looked to remain elevated but moving lower making the path easier for equity markets to the upside. Their charts were starting to look stronger, especially the $SPY and $QQQ on the weekly timeframe, but with $IWM less strong. On the shorter timeframe they all still looked a mess but with moves over the 20 day SMA giving hope a reversal was building.

The week played out with Gold drifting to the upside but quickly meeting resistance while Crude Oil broke consolidation to the upside. The US Dollar dropped back from resistance while Treasuries reversed higher out of oversold conditions. The Shanghai Composite moved to new 6 month lows while Emerging Markets consolidated at the recent lows.

Volatility continued lower all week to end at prior support. This removed pressure on equities and they responded by starting the week with a 3 day move higher. The SPY and QQQ gave up some ground Thursday but then they recovered Friday and joined ending the IWM moving higher Friday. 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 out of a short bull flag on the daily chart. It continued to move higher through Wednesday before pulling back Thursday. This had it at the 38.2% retracement of the post pandemic move higher. Friday saw it with a strong move higher touching the 100 day SMA before stalling. The Bollinger Bands® are now open higher and price is following them up. The RSI on the daily chart rising and about to move into the bullish zone with the MACD positive and moving higher.

The weekly chart shows a follow through week to the upside and move over the 20 week SMA. The RSI on this timeframe is rising to the midline with the MACD about to cross up. There is resistance at 389.50 and 391.50 then 394.50 and 397.50 before 400.50 and 403.50. Support lower comes at 386 and 382 then 380 and 376 before 373 and 369 then 364.50. Short Term Uptrend.

SPY Weekly, $SPY

With just one trading day left in October, equity markets put in a strong week for the second week in a row. Elsewhere look for Gold to continue its pullback while Crude Oil consolidates. The US Dollar Index looks to pullback in the uptrend while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue lower while Emerging Markets remain in a downtrend.

The Volatility Index looks to continue lower and only slightly elevated making the path easier for equity markets to the upside. Their charts are looking stronger on the shorter timeframe, especially the IWM and SPY. The QQQ is only slightly weaker. All three look stronger on the weekly timeframe. Use this information as you prepare for the coming week and trad’em well.

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