SPY Trends and Influencers October 30, 2021

Last week’s review of the macro market indicators saw with one week left in October, equity markets showed continued strength. Elsewhere looked for Gold ($GLD) to continue its short term consolidation while Crude Oil ($USL) continued in an uptrend. The US Dollar Index ($DXY) looked to pulled back in the short term uptrend while US Treasuries ($TLT) consolidated in the downtrend. The Shanghai Composite ($ASHR) looked to continue to mark time in a broad range while Emerging Markets ($EEM) pulled back in a long term uptrend.

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 continued to look strong, especially on the longer timeframe. On the shorter timeframe the QQQ looked in for a pause. The $IWM remained stuck in broad consolidation but with some positive progress at the top of the recent range.

The week played out with Gold holding in a range until settling lower Friday while Crude Oil finally met some short term resistance and paused. The US Dollar found support in the pullback and bounced while Treasuries made a move up to a higher high. The Shanghai Composite fell back to retest the recent lows before a bounce while Emerging Markets moved lower in their falling channel.

Volatility moved up off the lows late in the week to end closer to normal levels. This resulted in equities moving higher ealy in the week and then getting more choppy as it picked up. The SPY and QQQ ending back at all-time highs with the IWM continuing its wide consolidation. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week just pennies from an all-time high and moving higher. It had also printed a doji, an indecision candle though. Monday it cleared up the indecision moving to a new all-time high and then followed up with another on Tuesday. Wednesday came back to retest the prior high from September before a reversal and 2 more all-time highs to close out the week.

It closed at the 200% extension of the retracement of the pandemic drop. The daily chart shows the RSI moving higher in the bullish zone with the MACD rising as well. The Bollinger Bands® continue to give it room to move higher. The weekly chart shows 4 straight weeks moving higher following the 3rd quarter swoon.

The Bollinger Bands are supportive on this timeframe as well. The RSI is rising in the bullish zone with the MACD turning to cross up. There is no resistance higher and the next Fibonacci extension to 238.2% of the pandemic drop is to 504.75. Support lower sits at 455 and 454 then 450 and 447 before 444 and 441. Uptrend.

SPY Weekly, $SPY

With just two months left in the year, equity markets are showing renewed strength with a rebound from an ugly 3rd quarter reaching new all-time highs. Elsewhere look for Gold to continue to consolidate while Crude Oil continues to the upside. The US Dollar Index continues to drift to the upside at the edge of confirming a reversal while US Treasuries rebound to a short term uptrend. The Shanghai Composite looks to continue to mark time while Emerging Markets try to hold at support in a downtrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY are also very strong. The IWM just keeps refusing to play though, moving sideways in what is now a 9 month consolidation. Use this information as you prepare for the coming week and trad’em well.

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