SPY Trends And Influencers: November 25, 2017
Dragonfly Capital | Nov 25, 2017 11:58PM ET
Last week’s review of the macro market indicators noted with November options expiration behind it, the markets were driving into the shortened Thanksgiving week with a changing of the guard to the small caps. Elsewhere looked for Gold (SPDR Gold Shares (NYSE:GLD)) to continue in its uptrend while Crude Oil (United States Oil (NYSE:USO)) worked through short term resistance. The US Dollar Index ($DXY) paused in its short term uptrend while US Treasuries (iShares 20+ Year Treasury Bond (NASDAQ:TLT)) consolidated.
The Shanghai Composite (NYSE:ASHR) was taking a breather in its uptrend and Emerging Markets (NYSE:EEM) were consolidating their move higher. Volatility (NYSE:VXX) looked to remain very low keeping the bias higher for the equity index ETF’s SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). On the shorter timeframe the IWM was now taking the lead as the SPY and QQQ consolidated. In the longer frame the IWM still needed to prove itself a leader as the QQQ and SPY mark time.
The week played out with Gold finding resistance and pulling back early only to finish little changed while Crude Oil continued higher. The US Dollar reversed lower, negating the bullish mood while Treasuries moved slightly higher. The Shanghai Composite pulled back from resistance while Emerging Markets moved to new 6 year highs.
Volatility pulled back over the week into the single digits, keeping the bias higher for equities. The Equity Index ETF’s had a slow start to the week, with the IWM and SPY drifting up but the QQQ lagging. That changed by Tuesday as all 3 started higher, and the QQQ taking the lead into the weekend. What does this mean for the coming week? Lets look at some charts.
SPY Daily, $SPY
The SPY came into the week holding over the 20 day SMA and near the all-time high from earlier in the month. It held there Monday in an uneventful day. Tuesday it gapped higher to open and held there for a new all-time high. Wednesday saw consolidation before the holiday and then it closed the week with a small move higher to another new all-time high.
The daily chart shows the RSI moving back up off of the mid line, and confirming a Positive RSI Reversal with a target to 261.20. The MACD is about to cross up, a buy signal, and the Bollinger Bands® are turning higher to allow a move up. All of the SMA’s continue to move up almost in parallel.
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On the weekly chart the move up out of a small consolidation is visible. The RSI is overbought but moving sideways and under 80, equals strong. The MACD is rising as well. There is no resistance above and support lower sits at 259.25 then 257 and 256 followed by 254.50 and 252.50. Continued Uptrend.
SPY Weekly, $SPY
With Thanksgiving behind and the holiday season is in full swing, usually meaning light trading for equity markets. But light or not, equities come into the season ready to party and looking strong. Elsewhere look for Gold to consolidate marking time while Crude Oil continues its move higher. The US Dollar Index is renewing its downtrend while US Treasuries are drifting higher, trying to make a new high. The Shanghai Composite is pausing while Emerging Markets are renewing their trend higher.
Volatility is back to very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on the weekly timeframe. On the daily frame though the SPY appears to be strongest with the QQQ at some resistance and the IWM consolidating. Despite the moves higher, Use this information as you prepare for the coming week and trad’em well.
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