SPY Trends and Influencers October 7, 2023

• Posted by Greg Harmon
• on October 7th, 2023

Last week, the review of the macro market indicators saw with the 3rd Quarter in the books, equity markets continued to show weakness. Elsewhere looked for Gold ($GLD) to continue its short term trend lower while Crude Oil ($USO) consolidated in its uptrend. The US Dollar Index ($DXY) continued to trend to the upside while US Treasuries ($TLT) trended lower. The Shanghai Composite ($ASHR) looked to continue the slow drift lower while Emerging Markets ($EEM) consolidated in a broad range.

The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. Their charts looked weak on the shorter timeframe, with the $QQQ the best at support. On the longer timeframe both the $QQQ and $IWM were holding in consolidation ranges while the $SPY was teasing a continuation lower.

The week played out with Gold finding support Monday and consolidating while Crude Oil crashed lower out of consolidation. The US Dollar made a new 10 month high before a small pullback while Treasuries continued down toward 20 year lows. The Shanghai Composite was closed all week but remains biased lower while Emerging Markets dropped to test 4 year support levels.

Volatility rose to test the resistance area in place since April at what was support for all of 2022 and stalled. This put initial pressure on equities and they responded by starting the week with a 2 day move lower. All found support by Wednesday with the SPY and QQQ reversing to finish higher on the week. The IWM held at the lows until a move up Friday left it down slightly. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week pulling back from a failed attempt to move back over resistance at prior support on the daily chart. It found support Tuesday and held there through Thursday just above the 200 day SMA. Friday saw what looked like a premarket disaster turn around and rise back to that resistance to end the week on the positive side. The RSI is rising up out of oversold territory with the MACD curling to cross up but negative.

The weekly chart shows a second hammer reversal candle confirming last week’s move higher. The RSI on this timeframe is turning back up at the midline, remaining bullish, with the MACD falling but positive. There is support lower at 428.50 and 425.50 then 423.50 and 420 before 417.50 and 413.50. Resistance higher is at 430 and 435.50 then 437.50 and 444 before 447. Possible Reversal in Short Term Downtrend.

SPY Weekly, $SPY

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 look for Gold to continue its downtrend while Crude Oil continues in the fast short term move lower. The US Dollar Index continues in an uptrend but on a three day losing streak while US Treasuries trend lower. The Shanghai Composite looks to reopen after a week off continuing the bias to the downside while Emerging Markets sit at support in consolidation.

The Volatility Index looks to remain low making the path easier for equity markets to the upside. Their charts have 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 are printing bottoming candles. The IWM continues to run its own race in a broad but tightening consolidation. Use this information as you prepare for the coming week and trad’em well.

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