SPY Trends and Influencers October 9, 2021

Last week’s review of the macro market indicators saw with only one quarter of the year remaining, equity markets were staging their biggest pullbacks since the spring. Elsewhere looked for Gold ($GLD) to consolidate while Crude Oil ($USL) consolidated in an uptrend. The US Dollar Index ($DXY) continued to trend higher while US Treasuries ($TLT) pulled back. The Shanghai Composite ($ASHR) looked to continue in consolidation while Emerging Markets ($EEM) trended lower but were at support.

The Volatility Index ($VXX) looked to at remain moderate levels making things more difficult for equities to improve. Their charts remained mixed with the $SPY and $QQQ strong with digestive pullbacks on the longer timeframe, but in downtrends on the shorter timeframe. The $IWM remained in its long sideways consolidation.

The week played out with Gold continuing in consolidation after a failed attempt to move higher Friday while Crude Oil met resistance mid-week at new highs. The US Dollar found support on a shallow pullback and bounced while Treasuries continued to move lower. The Shanghai Composite came out of Golden Week Friday and started higher while Emerging Markets also found support at the August lows and bounced the back half of the week.

Volatility moved lower on the week to erase the recent higher plateau. This eased the pressure on equities mid-week and they responded with a move higher Thursday that held up Friday. This resulted in the SPY and QQQ moving up out of the bottom of the pullback while the IWM continues in consolidation. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week after an inside day and possible bottom. It held there through Wednesday building a 5 day flat bottom before a gap up Thursday to the 20 day SMA. It held there Friday to close the week. The Bollinger Bands® on the daily chart are now shifted to sideways. The RSI is stalled at the midline with the MACD trying to cross up but negative.

The weekly chart shows the Bull Flag continuing to build now near the 20 week SMA. The RSI has worked out of overbought territory and the MACD is falling but positive. There is support lower at 437.50 and 436 then 430.50 and 428.50 before 425.50 and 423 then 420. Resistance higher comes at 441 and 444 then 447. Pullback in Uptrend.

SPY Weekly, $SPY

Heading into October options expiration week, equity markets showed some resilience with a rebound in the larger cap markets. Elsewhere look for Gold to continue in consolidation while Crude Oil drives higher in the uptrend. The US Dollar Index continues to drift to the upside while US Treasuries pullback in a downtrend. The Shanghai Composite looks to continue the sideways motion while Emerging Markets trend to the downside.

The Volatility Index looks to remain at moderate levels reducing the downward pressure on equity markets. The SPY and QQQ charts look strong on the longer timeframe and may be ready to reverse higher again on the shorter timeframe. The IWM however continues to churn marking time sideways in a nine month channel. Use this information as you prepare for the coming week and trad’em well.

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