SPY Trends and Influencers: Monthly Edition July into August 2013
- Posted by Greg Harmon
- on August 1st, 2013
Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting that Gold ($GLD) and Copper ($JJC) would consolidate with downside biases, with a much stronger bias for Gold than Copper. Crude Oil ($USO) also looked to consolidate as it had been but with an upward bias, while Natural Gas ($UNG) pulled back in the uptrend. US Treasuries ($TLT) looked to be a mess and would continue the trend lower while the US Dollar Index ($UUP) consolidated in its uptrend. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked to continue to move lower as the DAX ($DAX) pulled back in the short term in its uptrend. Volatility ($VIX) looked to remain low but with a slight upward drift. This painted a mosaic for the Equity Index ETF’s $SPY, $IWM and $QQQ that supported more upward movement in the coming months. The individual charts saw that there was room for some short term consolidation and even a short pullback without breaking the upward bias. How does an additional month impact the longer term picture? Let’s look at some charts.
The SPY launched higher off of the mid line between the Median and Upper Median Lines of the Andrew’s Pitchfork. The attraction of the Upper Median Line is winning out. The Measured Move higher out of this consolidation takes it to 182. The Relative Strength Index (RSI) is bullish and a bit technically overbought but not extreme, with a Moving Average Convergence Divergence indicator (MACD) that continues to rise. All signs point north. There is no resistance higher but support comes below at 157 and 142. Continued Uptrend.
The monthly outlook suggests that Gold and Copper will continue to consolidate with a bias lower while Crude oil continues to advance, as it watches Natural Gas look for a bottom in its move lower. The US Dollar continues to consolidate in a tightening range while US Treasuries look to continue lower. The Shanghai Composite and Emerging Markets look to continue to move lower as well, while the German DAX looks for strength to break consolidation higher. Volatility looks to remain low keeping the bias for equities higher. The Equity Index ETF’s SPY, IWM and QQQ are all looking better to the upside, with the SPY and IWM slightly overbought. 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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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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