SPY Trends and Influencers May 3, 2014

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators suggested, as the markets closed out April, that equities were looking weak. Elsewhere looked for Gold ($GLD) to continue higher while Crude Oil ($USO) took a breather and retreated. The US Dollar Index ($UUP) looked better lower while US Treasuries ($TLT) were biased lower in the uptrend. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) both were biased to the downside in the short term with the risk of both just consolidating. Volatility ($VIX) looked to remain low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, despite their moves lower the previous week. Their charts suggested that the short term would feel some more pain with the QQQ weakest followed by the IWM and then the SPY.

The week played out with Gold consolidating in a tight range while Crude Oil continued lower. The US Dollar also moved in a tight range unable to break higher or lower while Treasuries quickly found support and moved higher. The Shanghai Composite bounced off of support on its short week while Emerging Markets consolidated in tight range. Volatility made a new three month low ending at the low. The Equity Index ETF’s all moved higher but without any new highs. The SPY is close and the strongest making a higher high, while the QQQ is near a higher high and the IWM is just good to come off the lows. 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 d
SPY Weekly, $SPY
spy w

The SPY tested the 20 and 50 day SMA’s Monday and pulled back up with a long lower shadow. That proved to be a strong reversal day as it continued higher through the week with a ton of news. The daily chart shows the week ending with a couple of upper shadows, still consolidating in a range. The RSI remains in the bullish zone with a MACD that is rising. These support more upside price action. The weekly chart looks a bit stronger. The RSI is rising and the MACD may be flattening. The candle ends at the top of the range. There is resistance higher at 188.90 and 189.70 with a Measured Move higher to 192.05 over that. Support lower comes at 187.20 and 186.75 followed by 185. Consolidation with an Upward Bias.

Heading into the ‘Sell in May and Go Away’ season the equity markets are looking better. Elsewhere look for Gold to consolidate in its uptrend with a bias higher while Crude Oil continues lower. The US Dollar Index seems biased lower while US Treasuries are biased higher. The Shanghai Composite and Emerging Markets are both biased to the upside. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The indexes themselves all look better to the upside in the short term with the SPY strongest followed by QQQ and then IWM. Use this information as you prepare for the coming week and trad’em well.

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