SPY Trends and Influencers July 26, 2014
- Posted by Greg Harmon
- on July 26th, 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, heading into the week that the equity markets were again mixed. Elsewhere it looked for Gold ($GLD) to continue lower in its consolidation while Crude Oil ($USO) continued lower as well. The US Dollar Index ($UUP) had a slight upward bias in the sideways price action while US Treasuries ($TLT) were biased to continue higher. The Shanghai Composite ($SSEC) remained stuck in a sideways rut while Emerging Markets ($EEM) consolidated at resistance. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed a mixed picture though, with the QQQ the strongest and looking for more upside, while the SPY consolidated in the uptrend and the IWM was biased lower in the short run within its consolidation.
The week played out with Gold heading lower before rebounding Friday to end the week back up over 1300, while Crude Oil consolidated at last weeks closing level. The US Dollar continued to move slightly higher while Treasuries found new 52 week highs. The Shanghai Composite broke out of its sideways motion higher with Emerging Markets probing at 3 year resistance. Volatility pulled back a bit before rebounding slightly to end near unchanged. The Equity Index ETF’s moved higher early in the week with the SPY and QQQ making new all-time and 14 year highs before a pullback late in the week erased most of the gains. What does this mean for the coming week? Lets look at some charts.
The SPY started the week with an inside candle on the 20 day SMA but quickly gapped higher to run to new all-time highs. Friday’s pullback filled the gap lower but opened one higher. The RSI on the daily chart is channeling lower but remains in the bullish zone while the MACD is also diverging lower but with a very shallow rate of decline. The 20 day SMA held it as support Friday as has been the case lately. On the weekly chart the picture is more of consolidation in the uptrend. This is not unexpected as the price approaches the big round number 200. The RSI on this timeframe is strong and bullish with a MACD that is leveling. A stronger picture than the daily chart. There is a target at 200 and then 202.50 from a Measured Move above that. Support lower may come at 196.50 and 195 followed by 194 and 193 before the gap between 190.48 and 191.52. Consolidation in the Uptrend.
Heading into the last days of July, the Equity Indexes again are mixed. Elsewhere look for Gold to continue lower in its consolidation while Crude Oil slowly climbs in its broad consolidation. The US Dollar Index is breaking higher and looks to continue in the short run while US Treasuries continue to look good to the upside. The Shanghai Composite and Emerging Markets are also biased to the upside now with the risk that Emerging Markets find resistance. Volatility looks to remain at low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. There chart paint a mixed picture though with the QQQ looking strong and ready to continue higher while the SPY consolidated in the uptrend and the IWM pulls back in the consolidation range. Use this information as you prepare for the coming week and trad’em well.
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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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