SPY Trends And Influencers

Last week’s review of the macro market indicators saw heading into the new week it looked like more of the same. Gold (GLD) and Crude Oil (USO) were better to the upside with Oil stronger and Gold having a chance of consolidation. The US Dollar (UUP) looked to continue to pullback in the uptrend with Treasuries (TLT) possibly moving higher in the short run, within a pullback. The Shanghai Composite (SSEC) and Emerging Markets (EEM) were poised to continue higher, at least in the short run for the Chinese market.

Volatility (VIX) looked ready to test the lows of 2005 through 2007. This created a very positive backdrop for the Equity Index ETF’s. The charts of the SPY and QQQ agreed with the inter-market view, while the IWM looked like the best of the three to consolidate the recent gains. Use this information as you prepare for the coming week and trade’m well.

The week played out with Gold consolidating over 1600 while Crude Oil moved higher. The US Dollar held a range while Treasuries moved lower. The Shanghai Composite found the top and reengaged the downtrend while Emerging Markets ran a flatline sideways. Volatility is testing the lows and allowing the Equity Index ETF’s to move higher. What does this mean for the coming week? Lets look at some charts.

SPY Daily, SPY

SPY Weekly, SPY

The SPY broke the consolidation and moved higher throughout the week showing slow strength near the April high and pre-financial crisis peak. The Measured Move target of 149.07 is now in play. The daily chart shows a Relative Strength Index (RSI) that is moving towards technically overbought but no where near extreme, and still trending higher.

The Moving Average Convergence Divergence indicator (MACD) also averted a cross to negative on this time frame and is growing. With the SMA’s rising the uptrend looks healthy. Moving out to the weekly view the picture is bullish as well with a RSI that is bullish and trending higher and a MACD that has crossed to positive after trending higher for weeks as well. Also note the next Fibonacci extension above the past high is at 161.97. Support lower is found at 137.90 and 133.66 before 126.48. Continued Upside.

Heading into the back half of August the markets look very similar to last weeks view. Gold and Crude Oil look best to continue higher, with a chance that Gold consolidates further. The US Dollar Index looks to consolidate, but with an upward bias and Treasuries look to continue lower. The Shanghai Composite looks to set new multi-year lows while Emerging Markets consolidate further before another upside move.

Volatility looks to continue towards historic lows allowing for the Equity Index ETF’s SPY, IWM and QQQ to continue their rise to multi-year highs. The SPY looks the best followed by the QQQ and then the IWM, which is still among some previous congestion. It seems only a hard reversal by Treasuries could derail this market now. Use this information as you prepare for the coming week and trade’m 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.

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