SPY Trends and Influencers May 25, 2019

Last week’s review of the macro market indicators saw equities continued to experience some setbacks as the markets closed out May options expiration. Elsewhere looked for Gold ($GLD) to continue its pullback while Crude Oil ($USO) resumed the uptrend. The US Dollar Index ($DXY) looked to drift higher while US Treasuries ($TLT) were also biased to the upside.

The Shanghai Composite ($ASHR) remained stuck in its pullback while Emerging Markets ($EEM) continued the downtrend.  Volatility ($VXXB) looked to continue to moderate, easing the pressure on the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed intra-week strength in the pullbacks of the SPY and QQQ with the IWM stuck in a range. All 3 looked weaker on the daily charts.

The week played out with Gold finding its footing and then lifting late in the week while Crude Oil turned consolidation into a rout to the downside. The US Dollar pulled back from a retest at the prior high while Treasuries rocketed higher. The Shanghai Composite continued to consolidate in a narrow range while Emerging Markets continued lower.

Volatility held in a tight range in the upper teens, keeping the bias slightly higher for equities. The Equity Index ETF’s reacted to trade headlines from the US and China creating selling pressure for the SPY, IWM and QQQ before the long holiday weekend. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week having reversed in its pullback, but with back-to-back long upper shadows on the candlesticks. The reversal was a positive but the shadows showed a lack of strong follow through. And Monday saw a move lower, followed by a small bounce Tuesday that held Wednesday, still under the 50 day SMA. Thursday saw a gap down that was partially filled Friday.

The daily chart shows a second test at the top of the range that held the SPY from October through to early December. Holding here is a plus. The RSI is sitting under the mid line though and churning with the MACD falling and now negative. Note the 200 day SMA sitting just below as well. This chart does not scream strength nor does is shout weakness.

On the weekly chart the SPY printed an inside week, a possible reversal, as it sits over the 20 week SMA. The RSI is pulling back but in the bullish zone and over the mid line. The MACD is also heading lower but positive and yet to cross down. There is support lower at 282 and 280 then 279 and 277.50 before 274.50. Resistance above stands at 284 and 285 then 287 and from 289.50 to 290.50 before 292 and 294. Possible Reversal in Pullback.

SPY Weekly, $SPY

Heading into the unofficial start of summer equity markets got kicked in the teeth again but continue to hang on. Elsewhere look for Gold to consolidate in the downtrend while Crude Oil pulls back. The US Dollar Index is changing to a short term downtrend while US Treasuries continue to march higher. The Shanghai Composite and Emerging Markets look to continue to move lower.

Volatility looks to remain stable at moderate levels keeping the pressure off of for the equity index ETF’s SPY, IWM and QQQ. This allow has allowed sentiment driven by headlines to play a bigger roll. In response the QQQ is looking the weakest with the SPY and IWM finding support at prior levels. Use this information as you prepare for the coming week and trad’em well.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.