SPY Trends and Influencers September 30, 2023

• Posted by Greg Harmon
• on September 30th, 2023

Last week, the review of the macro market indicators saw 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 looked for Gold ($GLD) to continue in consolidation while Crude Oil ($USO) continued the uptrend. The US Dollar Index ($DXY) continued to drift to the upside with a potential longer term break out higher while US Treasuries ($TLT) pulled back in their downtrend.

The Shanghai Composite ($ASHR) looked to continue in long term consolidation along with Emerging Markets ($EEM). The Volatility Index ($VXX) looked to remain low and stable making the path easier for equity markets to the upside. Their charts, however, were looking weak especially on the shorter timeframe. On the longer timeframe both the $QQQ and $SPY were on the cusp of a downtrend but with positive momentum. The $IWM continued to slowly tighten the range in consolidation.

The week played out with Gold breaking its consolidation range to the downside while Crude Oil reached an 11 month high before some profit taking. The US Dollar Index reached a 10 month high in its move up while Treasuries fell back to levels not seen since 2007. The Shanghai Composite hovered in a tight range retesting the August lows while Emerging Markets also continued lower back to support levels in place since October last year.

The Volatility Index rose to test the resistance zone in place since April before dropping back. This continued to put pressure on equities and they started the week with a move lower into Wednesday. All found support Wednesday afternoon and reversed into the end of the week before Friday afternoon selling. This resulted in the SPY and QQQ ending below break down levels and with the IWM failing to close the September gap down. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week breaking the later June low on the daily chart. It recovered Monday but then dropped back Tuesday ending at a new 4 month low. It dipped lower intraday Wednesday to close the June 2 gap up before recovering and rising again Thursday. Friday saw a gap up at the open that sold off all day. The afternoon saw some buying to leave it slightly lower on the week. The RSI bounced off oversold levels as it hit the 150 day SMA but remains in the bearish zone with the MACD negative and falling.

The weekly chart shows a hammer candle, a possible reversal if confirmed higher next week. It continues to hold over the 100 week SMA but with the RSI dipping below the midline and then MACD crossed down and dropping. Both indicators remain in bullish ranges though. There is support lower at 425.50 and 423.50 then 420 and 417.50 before 413.50 and 411. Resistance higher is at 428.50 and 430 then 435.50 and 437.50 before 444 and 447. Short Term Downtrend.

SPY Weekly, $SPY

With the 3rd Quarter in the books, equity markets continue to show weakness. Elsewhere look for Gold to continue its short term trend lower while Crude Oil may consolidate in its uptrend. The US Dollar Index continues to trend to the upside while US Treasuries trend lower. The Shanghai Composite looks to continue the slow drift lower while Emerging Markets consolidate in a broad range.

The Volatility Index looks to remain low and stable making the path easier for equity markets to the upside. Their charts look weak on the shorter timeframe, with the QQQ the best at support. On the longer timeframe both the QQQ and IWM are holding in consolidation ranges while the SPY is teasing a continuation lower. Use this information as you prepare for the coming week and trad’em well.

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