SPY Trends and Influencers: Monthly Edition May into June 2012
- Posted by Greg Harmon
- on June 1st, 2012
Last month in this space my Monthly Macro Review/Preview suggested that there was a lot of consolidation going on. Gold ($GLD) and Copper ($JJC) fit this with a bias for a breakdown for Gold but higher for Copper. US Treasuries ($TLT) and the US Dollar Index ($UUP) also fit the picture with Treasuries biased to a break higher. Crude Oil ($USO) was one of the few strong charts among the influencers with Natural Gas ($UNG) biased to break lower or consolidate. The Shanghai Composite ($SSEC) looked to consolidate with a lower bias while the German DAX ($DAX) looked biased higher but might consolidate, with Emerging Markets ($EEM) consolidating with an upward bias. Volatility ($VIX) was even consolidating after a 7 month run lower. Despite all this consolidation, the Equity Index ETF’s $SPY, $IWM and $QQQ were set up to continue higher in the coming months as they sat at resistance levels consolidating. How does an additional month impact the longer term picture? Let’s look at some charts.
The SPY fell short of reaching the 100% retracement of the move lower during the financial crisis by a hair and fell back. The move put it back under the Hagopian Trigger Line for the bearish (red) Pitchfork and draws it toward the Median Line of the bullish (green) Pitchfork. The falling Relative Strength Index (RSI) and a Moving Average Convergence Divergence (MACD) indicator that is about to cross negative also support more downside within the longer term uptrend. Next support is found at 125.30, near that Median Line, followed by 120.65 and 116.90. A move under 112 would put the uptrend in question. Resistance is found higher at 134.40 and 141.50-143.00. Continued Pullback in the Uptrend.
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The monthly outlook shows resolution of the consolidation zones in many areas. Gold is biased to the downside with Copper shifting the bias in consolidation from upward to downward. US Treasuries and the US Dollar Index look balls to the walls higher. Crude Oil is now moving lower and looks to continue with Natural Gas continuing to consolidate. The Shanghai Composite remains better lower within the consolidation while the German DAX joins it, with Emerging Markets consolidating but on the verge of a collapse. Volatility is is moving up and looks to continue. With this backdrop the Equity Index ETF’s SPY, IWM and QQQ are set up to continue higher in the coming months but look to continue to experience pullbacks in that trend in the intermediate term. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.
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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.blog comments powered by Disqus
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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