SPY Trends and Influencers September 23, 2023

• Posted by Greg Harmon
• on September 23rd, 2023

Last week, the review of the macro market indicators saw with the September quad witching options expiration in the books and heading into next week’s FOMC meeting, equity markets had a weak close out after holding firm all week. Elsewhere looked for Gold ($GLD) to continue to consolidate under 2000 while Crude Oil ($USO) continued the trend higher. The US Dollar Index ($DXY) continued to drift to the upside toward a break out while US Treasuries ($TLT) trended lower. The Shanghai Composite ($ASHR) looked to continue the trend lower while Emerging Markets ($EEM) continued in broad consolidation.

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 on the longer timeframe, consolidating a trend move higher. On the shorter timeframe both the QQQ and SPY were showing a bit more weakness. The $IWM just continued to motor along sideways in consolidation on both timeframes.

The week played out with Gold tightening the consolidation range while Crude Oil met resistance midweek and saw some profit taking. The US Dollar also found somer resistance late in the week as it approached the March high while Treasuries touched a new cycle low with the ETF reaching a 12 year low. The Shanghai Composite continued lower as well, but caught a bounce Friday while Emerging Markets touched a 4 month low before bouncing Friday.

The Volatility Index rose up off the 52 week lows but remained in the lower range it has traveled since June. This and the FOMC meeting put some midweek pressure on equities and they responded by moving lower. The SPY and QQQ found support Friday as they touched the late June and August support areas. The IWM fared slightly worse ending at a 3 month lows. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week in consolidation and at support on the daily chart. It held there Monday and Tuesday and then broke to the downside following the FOMC statement and press conference Wednesday. It continued lower Thursday and held in a tight range Friday ending the day and week at 3.5 month low. The Bollinger Bands are open lower suggesting more downside as price sits at the end of June pullback level. The RSI is falling in the bearish zone with the MACD negative and falling.

The weekly chart shows a bearish near Marubozu candle for the third down week in a row. This appears to take the price out of consolidation, but just barely. The RSI on this timeframe is falling at the midline in the bullish zone with the MACD dropping but positive. The flat 200 week SMA below near 420 seems a possible target. There is support lower at 430 and 428.50 then 425.50 and 423.50 before 420 and 417.50. Resistance higher sits at 435.50 and 437.50 the 444 and 447 before 451 and 454. Short Term Downtrend.

SPY Weekly, $SPY

With the September FOMC meeting in the books and one week left in the 3rd Quarter, equity markets ran into a buzz saw in reaction to Powell’s comments. Elsewhere look for Gold to continue in consolidation while Crude Oil continues the uptrend. The US Dollar Index continues to drift to the upside with a potential longer term break out higher while US Treasuries pullback in their downtrend. The Shanghai Composite looks to continue in long term consolidation along with Emerging Markets.

The Volatility Index looks to remain low and stable making the path easier for equity markets to the upside. Their charts, however, are looking weak especially on the shorter timeframe. On the longer timeframe both the QQQ and SPY are on the cusp of a downtrend but with positive momentum. The IWM continues to slowly tighten the range in consolidation. Use this information as you prepare for the coming week and trad’em well.

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