SPY Trends and Influencers September 1, 2018

Last week’s review of the macro market indicators noted as the summer was winding down heading into the last week of August, the equity markets were waking up and moving higher. Elsewhere looked for Gold ($GLD) to possibly bounce around in its downtrend while Crude Oil ($USO) moved higher. The US Dollar Index ($DXY) was stalling in its uptrend while US Treasuries ($TLT) were on the verge of breaking their consolidation to the upside.

The Shanghai Composite ($ASHR) continued to look weak and with an easier path lower while Emerging Markets ($EEM) were bouncing in their downtrend. Volatility ($VXX) looked to remain at very low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts were aligned with that view. The shorter daily timeframe showed all 3 back in uptrends, with the QQQ the only one short of its all-time high level. The weekly charts all looked fantastic as well and showed lots of upside potential.

The week played out with the Gold bounce ending and a pause while Crude Oil continued to move higher. The US Dollar continued to pullback and found support while Treasuries were rocked Tuesday but recovered by Friday. The Shanghai Composite started the week strong but gave it all back in the end while Emerging Markets met resistance at a lower high and backed off.

Volatility, under control early, made a late week push into the teens before giving that back Friday, keeping the bias higher for equities. The Equity Index ETF’s reacted with strength, with the SPY, IWM and QQQ all rising to new all-time highs and holding there to end the month. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY was sitting at the January all-time high as the week began. It gapped up to open the week Monday and continued to move higher through Wednesday. Thursday it paused and Friday it opened lower but showed intraday strength as it rose into the close. After 2 new all-time high daily closes it ended the week with a new all-time high weekly and monthly close.

The daily chart shows that the pullback began as the RSI reached an overbought condition. The RSI is rising though slowing its angle of ascent. It remains well above the 20 day SMA and with an open gap so perhaps some short term weakness but in a good uptrend on this timeframe.

The weekly chart shows another week to the upside with a small body candle. It is just plugging away higher. The Bollinger Bands® are angled higher and price is riding the upper edge. The RSI is also rising and not yet into technically overbought territory with the MACD moving up. There is no resistance above 291.50. Support lower comes at 290 and 287.50 then 286 and 284. Uptrend.

SPY Weekly, $SPY

UWith eight months in the books and the long Labor Day Weekend upon us the equity markets are waking up tanned and rested from their summer vacation. Elsewhere look for Gold to possibly pause in its downtrend while Crude Oil resumes the path higher. The US Dollar Index is searching for support in a pullback while US Treasuries are in broad consolidation. The Shanghai Composite and Emerging Markets are biased to the downside with the former on the cusp of new 4 year lows.

Volatility looks to remain very low keeping the bias higher for the equity index ETF’s. Their charts are now showing strength on both the daily and weekly timeframes as all end august at monthly all-time highs. 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.