Last week’s review of the macro market indicators noted that as the calendar turned to fall, equity markets continued to look strong on longer timeframes but with some short term rotation out of the Nasdaq 100 and into the Russell 2000 into the end of the 3rd quarter. Elsewhere looked for Gold (GLD (NYSE:GLD)) to continue its pullback while Crude Oil paused in its uptrend.
The US Dollar Index (DXY) also was moving sideways in its downtrend while US Treasuries (TLT) saw their uptrend at risk. The Shanghai Composite (ASHR) was marking time in its uptrend while Emerging Markets (EMM) slowly ground higher. Volatility (iPath S&P 500 VIX Short-Term Futures Exp 30 Jan 2019 (NYSE:VXX)) looked to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). The IWM was leading the charge now, disregarding the old adage to sell Rosh Hashanah, with the SPY (NYSE:SPY) consolidating and the QQQ looking a little tired.
The week played out with Gold bouncing early in the week but then resuming the path lower while Crude Oil pushed higher and then consolidated. The US Dollar moved higher in consolidation while Treasuries fell. The Shanghai Composite continued its consolidation while Emerging Markets pulled back a bit in their uptrend.
Volatility held tight near long term lows, keeping the bias higher for equities. The Equity Index ETF’s moved higher all week, with the SPY and IWM making new all-time highs and the QQQ hanging within 1% of its all-time high. What does this mean for the coming week? Lets look at some charts.
SPY Daily
The SPY came into the week consolidating at the highs and the round number 250. Monday it dropped to touch its 20 day SMA for the second time in September before reversing. It then moved higher the rest of the week, closing at a new all-time high for the daily, weekly and monthly charts. The daily chart shows the roll up that now gives a target to 255. The RSI is strong and rising while the MACD is avoiding a cross down and the Bollinger Bands® are turned higher.
On the weekly chart the strong week follows a Doji, confirming resolution of the indecision with another leg higher. The RSI on this timeframe is strong in the bullish zone while the MACD is about to cross up. There is no resistance higher. Support lower sits at 250 and 248 followed by 246 and 245 then 244 and 242. Continued Uptrend.
SPY Weekly
As the book closes on the 3rd Quarter stocks are driving to new all-time highs and looking very strong. Elsewhere look for Gold to continue its short term pullback while Crude Oil continues to trend higher. The US Dollar Index is consolidating after a long fall and maybe ready to reverse while US Treasuries are biased to continue lower in the short term. The Shanghai Composite continues to consolidate and Emerging Markets are consolidating in their uptrend.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look fabulous in the longer timeframe. The IWM may need a breather after a strong run while the SPY and QQQ also look strong in the short run. Use this information as you prepare for the coming week and trad’em well.
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