SPY Trends and Influencers November 10, 2018

Last week’s review of the macro market indicators noted as November began the equity markets found support and bounced ahead of the mid term elections. Elsewhere looked for Gold ($GLD) to move higher in the short term while Crude Oil ($USO) continued to pullback in its uptrend. The US Dollar Index ($DXY) was in a short term uptrend while US Treasuries ($TLT) were dropping lower. The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) were looking like they may be ready to reverse their downtrends.

Volatility ($VXX) remained elevated but had settled back into the teens keeping some pressure on equities but less than recently and allowing some upward movement. The equity index ETF’s $SPY, $IWM and $QQQ reacted with positive weeks, the IWM the strongest. They were all showing signs they may reverse higher as well. That was good news as it was the IWM that led all markets lower.

The week played out with Gold starting to leak lower early and then dropping while Crude Oil continued its move lower. The US Dollar moved slightly higher while Treasuries found their footing and made a small move up. The Shanghai Composite tried to maintain its gains but leaked lower late in the week while Emerging Markets made a higher high and then failed to follow through and fell back to end the week lower.

Volatility held higher early in the week and then started to drift back lower, ending the week back in the teens, easing the path for equities. The Equity Index ETF’s responded by moving higher early in the week, but weakness Friday saw them give up some to all of their gains. The IWM was leading to the upside and the first and fastest to move lower with the QQQ also giving up a sizable move and the SPY joining at a lower rate. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY had stalled in a bounce off of the late October low when the week started. It held there Monday, under the 20 day SMA printing an inside day. Tuesday it pushed to a higher high and followed through with a gap up Wednesday, ending over the 200 day SMA and October 17th bounce. Thursday saw another inside day and it pulled back Friday.

A positive week, and back over the 200 day SMA, but still some work to do before this pullback is in the rearview mirror. The RSI on the daily chart is trending higher but kinked down short of the bullish zone with the MACD rising towards a cross to positive. The Bollinger Bands® are opening to allow a move as well.

On the weekly chart the up move confirms the Hammer reversal from last week. The RSI is rising through the mid line with the MACD turning to level as it avoids going negative. There is support lower at 277.50 and 276 then 274.50 and 272.50 before 271.40. Resistance higher comes at 279 and 280 then 281 and 284 before 286. Short Term Uptrend.

SPY Weekly, $SPY

Heading into November Options Expiration the equity markets showed a good bounce on the week but with a weak finish Friday. Elsewhere look for Gold to consolidate its move higher while Crude Oil continues to move lower. The US Dollar Index is resuming its move higher while US Treasuries are pausing in their downtrend. The Shanghai Composite and Emerging Markets may be pausing in their downtrends.

Volatility continues to settle down in a slow fade, removing some downward pressure on equities, but it remains slightly elevated. The equities themselves are mixed with the SPY strongest and in a short term uptrend, while the IWM is pausing in its move higher and the QQQ is the weakest but broadly consolidating after the pullback. 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.