SPY Trends and Influencers June 30, 2012

Last week’s review of the macro market indicators saw heading into the last week of the second Quarter looked for Gold ($GLD) and Crude Oil ($USO) to continue lower. The US Dollar Index ($UUP) was poised to move higher with US Treasuries ($TLT) continuing to consolidate with a slight downside bias in the short term. The Shanghai Composite ($SSEC) looked headed lower while Emerging Markets ($EEM) continued the bear flag in the broad consolidation. Volatility ($VIX) looked to remain low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The view on Crude Oil contradicted this as Oil and Equities have been correlated, and a move higher by the US Dollar Index or especially Treasuries would likely bring Equities lower. Despite this the charts for the SPY, IWM and QQQ all showed a short term upside bias within consolidation on the weekly view.

The week played out with Gold falling to support while Crude Oil ran along the bottom of the lower range before both launched higher Friday. The US Dollar continued higher while Treasuries continued the consolidation, before both were knocked back Friday. The Shanghai Composite worked lower while Emerging Markets broke the bear flag lower before rebounding Friday. Volatility bounced higher before also dropping back to end the week. Th mixed signals played out in the Equity Index ETF’s as they moved sideways drifting lower until a major Friday rally led by the IWM. What does this mean for the coming week? Lets look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week gapping lower and consolidating at support only to gap back higher Friday breaking the most recent high and settling back over the 100 Simple Moving Average (SMA). The Relative Strength Index (RSI) on the daily chart is rising and about to move into bullish territory with a Moving Average Convergence Divergence (MACD) indicator that is positive and growing. All is positive on this timeframe. The weekly view shows a strong white candle negating the Evening Star doji from last week and over the 2011 highs. The RSI on this timeframe is continuing to rise towards bullish territory with a MACD that is improving towards a positive cross. The Momentum shows higher. Resistance is found at 138.95 and 141 followed by the previous high and then a renewed major bullish push higher. Support lower is found at 134.12 and 131.46 followed by 128 and 126.50. Under that it gets ugly. Short Term Upside Bias with Chance of Consolidation.

Heading into the back half of the year we start with a holiday shortened week and a market with some upside momentum. Crude Oil looks to continue the move higher while Gold may consolidate the gains within a down channel. The US Dollar Index looks to continue its pullback in the uptrend with Treasuries continuing to consolidate with an upside bias. The Shanghai Composite may take a breather in its downtrend while Emerging Markets consolidate in their downtrend, determining if they want to reverse it. Volatility looks in control and the combination creates an environment where the Equity Index ETF’s are biased higher. A reversal by the US Dollar Index or a move higher by Treasuries will likely negate this. The charts of the Equity Indexes generally agree and point higher with the IWM the strong est followed by the SPY and then the QQQ. Use this information as you prepare for the coming week and trade’m well.

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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.

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