SPY Trends and Influencers: Monthly Edition June into July 2014
- Posted by Greg Harmon
- on July 1st, 2014
A monthly excerpt from the Premium subscriber version covering all 13 markets.
Last month in this space my Monthly Macro Review/Preview had the monthly outlook heading into June suggesting that Gold ($GLD) and Copper ($JJC) would continue in their consolidations ranges with a downward bias for both. Crude Oil ($USO) and Natural Gas ($UNG) looked to be moving in the opposite way, consolidating but both with an upward bias. The US Dollar Index ($UUP) showed sign of continuing lower while US Treasuries ($TLT) continued to look strong. The Shanghai Composite ($SSEC) continued to look weak while the Emerging Markets ($EEM) and the German DAX ($DAX) looked strong and headed higher. Volatility ($VIX) looked to remain at anemic levels giving a wind to the backs of US Equity markets. The Equity Index ETF’s $SPY, $IWM and $QQQ continued to be biased to the upside, but the SPY looked the strongest with the IWM and QQQ needing to work through consolidation zones. How does an additional month impact the longer term picture? Let’s look at some charts.
The SPY continued to make new all-time highs in June defying pundits and top callers alike. The price action shows a solid move higher as it continues to be attracted to the Upper Median Line of the Andrews’ Pitchfork. The RSI is bullish and probably overbought for many, with a MACD that is continuing higher. The 138.2% extension of the move lower in the Financial crisis sits nearby at 199.88. Maybe that will halt it? Or maybe not. The SMA’s are all running higher and the price action has remained a pretty steady distance from the 20 month SMA since December 2013. There is no resistance higher and support may come below at 186.50 or 177. Continued Uptrend.
Heading into the heart of the summer the monthly outlook suggests that Gold and Copper will continue the trend sideways but with a bias higher for Gold and lower for Copper. Crude Oil and Natural Gas also look to continue to move sideways, but both with an upward bias on a break. The US Dollar Index shows no signs of doing anything expect for moving sideways while US Treasuries have an upward price bias in their consolidation. The Shanghai Composite may be finally basing after a long pullback, but basing does not mean rising soon, while Emerging Markets look to continue to move higher along with the German DAX. Volatility looks to remain low, but it is hard to imagine it can stay below the recent range for long. The Equity Index ETF’s SPY, IWM and QQQ are mixed with the SPY and QQQ looking strong and biased higher while the IWM is testing the top of a range, and could join them on a break higher. 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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