SPY Trends and Influencers: Monthly Edition June into July 2012

Last month in this space my Monthly Macro Review/Preview the monthly outlook showed resolution of the consolidation zones in many areas. Gold ($GLD) was biased to the downside with Copper ($JJC) shifting the bias in consolidation from upward to downward. US Treasuries ($TLT) and the US Dollar Index ($UUP) looked balls to the walls higher. Crude Oil ($USO) was moving lower and looked to continue with Natural Gas ($UNG) continuing to consolidate. The Shanghai Composite ($SSEC) remained better lower within the consolidation with the German DAX ($DAX) joining it, and Emerging Markets ($EEM) consolidating but on the verge of a collapse. Volatility ($VIX) was moving up and looked to continue. With this backdrop the Equity Index ETF’s $SPY, $IWM and $QQQ were set up to continue higher in the coming months but looked to continue to experience pullbacks in that trend in the intermediate term. How does an additional month impact the longer term picture? Let’s look at some charts.

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

SPY, $SPY

The SPY printed a bullish Piercing candle after touching the 20 month SMA and holding over the Fan Line. A continued move higher in July confirming the reversal would carry a 162 Measured Move higher. The RSI is bullish and rising and the MACD is positive, both supporting further upside. There is resistance higher at 142.28 and then a 138.2% Fibonacci extension to 172.80. Support lower is found at 128 and 119.80 followed by 114.30. Upside Bias.

Heading into the back half of the year, the monthly outlook suggests downside for Gold and consolidation for Copper, while Crude Oil looks lower with Natural Gas rebounding, reversing their long term positions. US Treasuries and the US Dollar Index look ready to continue higher. The Shanghai Composite and Emerging Markets look to continue to consolidate or move lower while the DAX consolidates with an upside bias. Volatility can go either way but looks to remain above the lower range experienced in the last six months with the VIX in a wide range between 15 and 28. Despite the strength of the the Dollar Index and Treasuries, the Equity Index ETF’s SPY, IWM and QQQ are set up to continue higher in the coming months. It is not likely that Treasuries, the Dollar Index and Equities all continue higher for long so look for signs of a breakdown. 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.

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