SPY Trends and Influencers August 16, 2014
- Posted by Greg Harmon
- on August 16th, 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 OpEx week that the equity markets still looked a bit shaky, but better than the prior week. Elsewhere looked for Gold ($GLD) to continue to consolidate with an upward bias while Crude Oil ($USO) consolidated with a downward bias. The US Dollar Index ($UUP) and US Treasuries ($TLT) looked set to consolidate with an upward bias. The Shanghai Composite ($SSEC) was also consolidating with an upward bias, while Emerging Markets ($EEM) were biased to the downside as they struggled at resistance. Volatility ($VIX) looked to remain low but with an upward bias keeping the bias flat to slightly lower for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed that the IWM was strongest again and showed the strongest signs of a reversal while the SPY and QQQ looked as if they could continue to consolidate in their long term uptrends. Use this information as you prepare for the coming week and trad’em well.
The week played out with Gold moving sideways but falling Friday to end the week lower while Crude Oil consolidated but then broke lower late in the week. The US Dollar moved slightly higher while Treasuries made new 14 month highs. The Shanghai Composite muddled along sideways while Emerging Markets moved back towards resistance. Volatility moved back to the prior lows before rebounding slightly. The Equity Index ETF’s moved higher on the week but gave back some of their gains Friday. What does this mean for the coming week? Lets look at some charts.
The SPY started the week with an eerie gap up in a Shooting Star candle that was confirmed lower Tuesday, filling the gap with a doji. That then reversed again higher to the 50 day SMA. The bearish engulfing candle Friday may signal a top if confirmed lower Monday. The Friday candle filled the gap from July 31st and got many talking about a top. The RSI on the daily chart is turning flat after breaking back above the mid line, but the MACD continues to rise, supporting more upside price action. Some uncertainty from mixed signals on this timeframe. On the weekly chart the price action looks rather bullish. It held the rising support line and moved higher. The RSI turned back higher and the MACD is starting to level. The bounce establishes a Measured Move higher at 210. There is resistance at 196.50 and 198.30 followed by 199. Support lower may come at 195 and 194 followed by 193 and 190.40. Upward Bias in the Uptrend.
As the books are closed on the August Options Expiration and we head into the lasts week of Summer the equity markets are still with some turbulence. Elsewhere look for Gold to bounce around the 1300 level while Crude Oil continues to be biased lower, but mindful of the bounce Friday. The US Dollar Index looks toppy and possibly ready for a correction lower while US Treasuries continue to be biased higher. The Shanghai Composite and Emerging Markets are consolidating but with the Chinese market biased higher and Emerging Markets having trouble at resistance and looking toppy. Volatility looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show that all look good on the longer timeframe but the QQQ the strongest in the short term with the SPY close behind and the IWM the weakest. 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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