SPY Trends and Influencers January 28, 2012
- Posted by Greg Harmon
- on January 28th, 2012
Last week’s review of the macro market indicators looked heading into another holiday shortened week that the markets would continue to improve. Gold ($GLD) looked likely to head a bit lower while Crude Oil ($USO) consolidated in the short term within the broad 95-102.5 range. Both the US Dollar Index ($UUP) and Treasuries ($TLT) were biased to the upside although Treasuries may continue in their consolidation range. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked better to the downside with a chance that Emerging Markets consolidate sideways. Volatility ($VIX) looked to continue lower but likely at a slower pace. These inputs set up a scenario where the US Equity Index ETF’s $SPY, $IWM and $QQQ could continue higher. The charts for the SPY and IWM agreed looking ready for more. The QQQ was up against resistance so it might take some time to get through but was also biased higher.
The week began with Gold behaving only to blow through 1700 midweek and continue higher while Oil did hold the range. The US Dollar did break lower but Treasuries bottomed and then consolidated. The Shanghai Composite did nothing because it was closed all week for the New Year holidays while the ETF proxy, $FXI, drifted higher, and Emerging Markets continued higher before consolidating to end the week. Volatility tested lower but went sideways most of the week. The Equity Index ETF’s had a mixed week, all testing higher but with the SPY pulling back Friday. What does this mean for the coming week? Lets look at some charts.
The SPY probed higher and pulled back, holding over support of the 7 day consolidation zone. The RSI is strong and bullish while the MACD is starting to fade as the consolidation continues. Still trending higher. On the weekly chart the price passed through the Fibonacci Arc and continued higher printing a long shadowed candle. The RSI is nearly into bullish territory as it runs higher and the MACD is growing more positive. There is resistance higher at 134.95 and above that 3 year highs and very bullish. Support comes at 130 and 128 followed by 125 lower. Continued Upside with Chance of Consolidation.
As January is closing out the coming week looks to bring more upside for Gold and further consolidation within the broad 93 – 103.83 range for Crude Oil. The US Dollar Index looks to continue lower while US Treasuries consolidate after probing lower. The Shanghai Composite and Emerging Markets are biased to the upside after China taking the week off. Volatility looks to continue to slowly move lower toward support. These influencers create a positive environment for the US equity index ETF’s SPY, IWM and QQQ, and their charts are all pointing to higher levels. A strong move by China lower could change this picture or as sharp move higher by the US Dollar Index. Use this information as you prepare for the coming week and trade’m well.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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