SPY Trends and Influencers September 28, 2019

Last week’s review of the macro market indicators saw, with the September FOMC and Quadruple Witching behind, equity markets held up well until more trade issues came out Friday. Even so, the declines were minor as the index ETF’s hold near their all-time highs. Elsewhere looked for Gold ($GLD) to stall at 1500 while Crude Oil ($USO) consolidated. The US Dollar Index ($DXY) was still drifting to the upside while US Treasuries ($TLT) bounced in their downtrend.

The Shanghai Composite ($ASHR) was consolidating the short term move higher with Emerging Markets ($EEM) stalling in their short term rise.  Volatility ($VXXB) looked to remain very low but had stopped dropping, changing the bias to neutral for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ both continued to hold near their all-time highs with strong longer term charts while the IWM was holding at the top of the 2019 wide consolidation zone.

The week played out with Gold rising to resistance to the upside before drawing back down while Crude Oil started lower but found support. The US Dollar moved up to test recent highs while Treasuries found a higher consolidation zone. The Shanghai Composite began to roll over while Emerging Markets drifted to the downside.

Volatility pushed up off of the lows, adding downside pressure on equities. The Equity Index ETF’s started the week with small gains but dropped hard Tuesday. The SPY and QQQ recovered much of the drop but the IWM failed to hold onto its bounce and drove lower, pulling the SPY and QQQ down to their lows. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY had fallen out of a short term consolidation as it entered the week, but still very close to the all-time highs. It dropped again Monday and then recovered. Tuesday it fell to the 50 day SMA and it bounced around in wider range days off of that the rest of the week. Friday’s close left it lower on the week.

The daily chart shows the drop closed one open gap below and held over prior resistance, now acting as support. The RSI is falling through the mid line, but not into bearish territory yet, with the MACD falling. The Bollinger Bands® are tightening as the price approaches the bottom band.

On the weekly chart the move looks muted. The RSI is continuing over the mid line but pulling back with the MACD flat and positive, but crossed down. There is resistance at 296.50 and 298.80 then 300 and 301 before 302. Support lower comes at 294 and 292 then 290. Consolidation.

SPY Weekly, $SPY

With 1 trading day left in the 3rd Quarter, equities are continuing to give no strong preference for direction, but are continuing to weather the headlines. Elsewhere look for Gold to consolidate around 1500 while Crude Oil pulls back in consolidation. The US Dollar Index is rising in a channel while US Treasuries pause in their bounce. The Shanghai Composite and Emerging Markets both look to continue lower.

Volatility has built up and looks poised to continue changing the bias to lower for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ look to continue to consolidate near all-time highs while the IWM continues to churn in a wide consolidation as well, but further from its highs. Use this information as you prepare for the coming week and trad’em well.