SPY Trends And Influencers: Monthly Edition March Into April 2013

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting that Gold (GLD) and US Treasuries (TLT) were at critical support levels and poised to move lower. Crude Oil (USO) and Copper (JJC) looked to continue to consolidate while the US Dollar Index (UUP) and Natural Gas (UNG) were both biased higher.

The Shanghai Composite (SSEC), German DAX (DAX) and Emerging Markets (EEM) were all biased higher with each showing different signs of potential stalls or pullbacks. Volatility (VIX) looked to continue drifting toward the historic lower range giving a tailwind to the Equity Indexes higher. The Equity Index ETFs, S&P 500 (SPY), Russell 2000 (IWM) and Nasdaq (QQQ) were set up to continue higher in their charts as well in the coming months, with the SPY the strongest followed by the IWM and then the QQQ. As noted on the individual charts, there was room for some short term downside without breaking the upward bias. A massive move higher by the US Dollar could unhinge this as could a big reversal in Treasuries.

How does an additional month impact the longer term picture? Let’s look at some charts:

SPY, SPY


The SPY continued higher in March nearly retracing to the all time high at 157.52. It is now also mid way between the Median Line and Upper Median Line of the Andrew’s Pitchfork and could be drawn to either side. The Relative Strength Index (RSI) is bullish and rising along with a bullish and rising Moving Average Convergence Divergence indicator (MACD) which both suggest it may continue higher. There is no resistance above 157.52 and 3-box reversal Point and Figure chart carries a price objective to 166 with the 138.2% Fibonacci extension is not until 192. Support lower is found at 154.50 and 144.50. Continued Upward Price Action.

The monthly outlook suggests the consolidation for Gold and Copper will continue with both biased lower on a break, while the trend lower for Crude Oil and Natural Gas continue higher. The US Dollar and US Treasuries continue to be biased higher but with a stronger bias to the Dollar and Treasuries are showing signs of weakness. The Shanghai Composite and Emerging Markets look to continue to move lower with Emerging Markets possibly reversing while the German DAX looks strong but is at long term resistance. Volatility can go either way but regardless looks to remain low and near historic lows. With that tailwind, the Equity Index ETF’s SPY, IWM and QQQ are set up to continue higher in the coming months. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

Disclosure: 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.

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