SPY Trends and Influencers: Monthly Edition January into February 2013

• Posted by Greg Harmon
• on February 1st, 2013

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting the metals Gold ($GLD) and Copper ($JJC) would continue to consolidate along with Crude Oil ($USO), while Natural Gas ($UNG) pulled back from its recent highs. US Treasuries ($TLT) looked to continue their consolidation in the uptrend while the shorter term trend lower for the US Dollar Index ($UUP) would also continue. The Shanghai Composite ($SSEC), German DAX ($DAX) and Emerging Markets ($EEM) all looked to continue to move higher. Volatility ($VIX) seemed happy to continue in the lower range between 15 and 22.25 with no major changes in sight, giving a tailwind to the equity markets. The Equity Index ETF’s $SPY, $IWM and $QQQ were set up to continue higher in the coming months, with IWM the strongest followed by the QQQ and then the SPY bringing up the rear. 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 broke the consolidation higher with a strong positive candle. It continues to move parallel to the Median Line of the bullish Pitchfork and away from the Hagopian Trigger line of the bearish Pitchfork. The Measured Move higher takes it to 165. The Relative Strength Index (RSI) is bullish and rising and the Moving Average Convergence Divergence indicator (MACD) is positive and growing. Some will note that the distance from the Median Line combined with the RSI near 70 and the MACD signal line at the 2007 extreme signal time for a pullback. This is not true though. These signals combined raise caution but each can extend further so they support further upside until a change occurs. Support lower comes at 140 and 132. Continued Upside.

The monthly outlook suggests Gold and Copper will continue to consolidate along with Crude Oil, while Natural Gas continues to pull back from its recent highs. If one of them moves higher expect it to be Crude Oil. US Treasuries look to continue their recent trend lower joining the US Dollar Index. The Shanghai Composite, German DAX and Emerging Markets all continue to look better higher. Volatility is making new lows and increasing the tailwind to the equity markets. The Equity Index ETF’s SPY, IWM and QQQ all set up to continue higher in the coming months, with IWM the strongest followed by the SPY and then the QQQ now bringing up the rear. 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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Dragonfly Capital Views Performance Through January 2013 Expiry

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