SPY Trends and Influencers October 12, 2019

Last week’s review of the macro market indicators saw, with the 3rd Quarter in the books equity markets had a rocky start to October but a strong finish on the week. Elsewhere looked for Gold ($GLD) to consolidate around 1500 while Crude Oil ($USO) bounced in the downtrend. The US Dollar Index ($DXY) continued the drift to the upside while US Treasuries ($TLT) drove back towards their all-time highs.

The Shanghai Composite ($ASHR) looked to come back from holiday biased lower and Emerging Markets ($EEM) had reversed to the upside in the short term.  A Volatility ($VXXB) spike had eased and looked to continue lower, shifting the bias to higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ reversed drops to close with strong momentum over support while the IWM held and bounced at the bottom of its wide consolidation range.

The week played out with Gold continuing to stick around 1500 while Crude Oil held at support until a move higher Friday. The US Dollar found resistance and pulled back while Treasuries met resistance and dropped lower. The Shanghai Composite bounced off its 200 day SMA while Emerging Markets continued the move to the upside late in the week.

Volatility tried a move higher early but faded to a lower low late in the week, relieving the pressure on equities and putting a wind at their back. The Equity Index ETF’s started the week drifting higher but then moved lower quickly. By Thursday they were pushing up and finished the week higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY had stalled in a bounce at the 50 day SMA as it came into the week. It held there Monday but then gapped down Tuesday and ran lower. A retest of the low Wednesday was followed by a move higher that continued through Friday. It ended Friday with some profit taking in the last 30 minutes but up on the week.

The daily chart shows the RSI rising through the mid line and the MACD turning to cross up. It closed back over the 20 day SMA and that important 294.50 level for the first time in 3 weeks. On the weekly chart the long white real body confirmed the Hammer reversal from last week, and sets a higher low.

The RSI on this timeframe is rising off of the mid line with the MACD level and positive. There is resistance above at 298.80 and 300 then 301 and 302 before 302.50. It will take a new all-time high to confirm a break out. Support lower comes at 296 and 294 then 292 and 290 before 287. Rising in Consolidation.

SPY Weekly, $SPY

Heading into October Options Expiration and the first week of the new earnings season, equities have caught a bid and are looking stronger on the longer timeframe. Elsewhere look for Gold to continue to consolidate around 1500 while Crude Oil bounces higher in consolidation. The US Dollar Index looks to pullback in the drift higher while US Treasuries move lower. The Shanghai Composite is reversing to the upside and Emerging Markets look to continue their short term move higher in consolidation.

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