SPY Trends and Influencers September 22, 2018

Last week’s review of the macro market indicators noted heading into September Options Expiration week the equity markets had regained some swagger. Elsewhere looked for Gold ($GLD) to consolidate in its downtrend while Crude Oil ($USO) continued to drift higher. The US Dollar Index ($DXY) looked to continue to mark time while US Treasuries ($TLT) headed lower in broad consolidation.

The Shanghai Composite ($ASHR) remained weak and looking for support while Emerging Markets ($EEM) might find some footing after a long downtrend. Volatility ($VXX) looked to remain at very low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. And after a digestive week they all firmed up with positive weeks to show renewed short term strength, to go along with the long term strength.

The week played out with Gold finding support and bouncing before giving it all back Friday while Crude Oil drifted higher all week. The US Dollar moved slightly lower while Treasuries continued their run toward May lows. The Shanghai Composite found support just above the 2016 lows and bounced while Emerging Markets reversed to the upside.

Volatility had a small pop Monday before falling the rest of the week, keeping the bias higher for equities. The Equity Index ETF’s responded with a mixed reaction, with the SPY rising to new all-time highs and the QQQ following up later in the week, but the IWM however marking time just under the all-time highs. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY was rising as the week began and just below the August all-time high. Monday it pulled back in the uptrend, near the 20 day SMA. But Tuesday recovered that drop and it continued to a new all-time high on Thursday. Friday saw some profit taking into the options expiration and index rebalancing.

The daily chart shows the thrust Thursday took it out of the Bollinger Bands® so a pullback Friday just dropped it back inside. The RSI is pulling back but strong in the bullish zone with the MACD flat and positive. Those Bollinger Bands continue to point higher as do the rising and parallel SMA’s.

On the weekly chart things also look great. The RSI is rising in the bullish zone with the MACD rising and bullish. Neither are near extreme levels. The Bollinger Bands are pointed higher here too with price riding the upper rail higher. There is no resistance over 294. Support lower comes at 291.50 and 290 then 287.50 and 286 before 284. Uptrend.

SPY Weekly, $SPY

Heading into the last week of the 3rd quarter, equity strength has rotated from the small cap and tech names into the large caps of the Dow Jones Industrials and the S&P 500. The leaders are making new all-time highs as the laggards hold steady, a strong market. Elsewhere look for Gold to consolidate in its downtrend while Crude Oil slowly moves higher. The US Dollar Index looks to continue to the downside slowly while US Treasuries are at the bottom of consolidation and look better lower.

The Shanghai Composite is bouncing off a retest of the lows but not safe yet and Emerging Markets are bouncing in their downtrend as well. Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY is now leading the way on the shorter timeframe with the QQQ and IWM consolidating, while all look fantastic on the longer timeframe. 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.