SPY Trends and Influencers August 4, 2012
- Posted by Greg Harmon
- on August 4th, 2012
Last week’s review of the macro market indicators saw heading into the height of summer and the Olympic fortnight, the markets were looking up, although not all equally. Gold ($GLD) and Crude Oil ($USO) were looking to continue to move higher with a chance that Gold consolidates. The US Dollar Index ($UUP) and Treasuries ($TLT) were poised to continue their pullbacks within the uptrend. The Shanghai Composite ($SSEC) was heading lower while Emerging Markets ($EEM) might consolidate their recent move higher before continuing. Volatility ($VIX) looked to remain subdued allowing for the Equity ETF’s $SPY, $IWM and $QQQ to continue higher. The bias in the US Dollar Index and Treasuries supported more upside for equities as well. Looking at their charts showed that the SPY was the strongest and looked to continue higher while the QQQ was next followed by the IWM, both of which needed to break above consolidation areas to look more healthy to the upside.
The week played out with Gold falling and Crude Oil dipping slightly before both recovered Friday. The US Dollar and Treasuries moved higher before giving up gains to end the week lower. The Shanghai Composite and Emerging Markets were true to the charts with the Shanghai Composite continuing lower while Emerging Markets consolidated before rising to end the week. Volatility consolidated before heading lower to end the week. The Equity Index ETF’s also behaved as expected relatively, with the SPY and QQQ running sideways before ending higher and the IWM lagging, moving lower before a rebound. What does this mean for the coming week? Lets look at some charts.
The SPY pulled a head fake lower Thursday after consolidating early in the week, only to end at a 3 month high Friday. The prior potential bear flag is looking a lot more like a strong uptrend. The Measured Move higher takes it to 149. The RSI on the daily chart is in bullish territory and running back higher with a MACD that is also positive and growing. Both support a further move higher. On the weekly view the RSI is trending higher as well with a MACD that just crossed into positive territory. There is resistance at 141.48 and then the full retracement of the move lower from the financial crisis just over 142 before. Support lower is found at 136 and 126.48. A move below that would change the trend to lower. Uptrend Continues.
As the dog days of August begin the markets are looking better. Gold and Crude Oil are poised to consolidate with a bias for an upside move on a break. The US Dollar Index and Treasuries seems content to move continue to pullback in their uptrends. The Shanghai Composite really looks ugly but may have a reprieve for a few days and Emerging Markets are poised to move higher. Volatility looks to remain low and possibly make new lows setting the stage for the Equity Index ETF’s SPY, IWM and QQQ, to continue to run higher. The inter-market view with the lower bias for Treasuries and the US Dollar, and higher bias for Crude Oil also support more upside for Equities. 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.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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