SPY Trends and Influencers August 23, 2014
- Posted by Greg Harmon
- on August 23rd, 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 books were closed on the August Options Expiration and we headed into the last week of Summer that the equity markets were still with some turbulence. Elsewhere looked for Gold ($GLD) to bounce around the 1300 level while Crude Oil ($USO) continued to be biased lower. The US Dollar Index ($UUP) looked toppy and possibly ready for a correction lower while US Treasuries ($TLT) continued to be biased higher. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were consolidating but with the Chinese market biased higher and Emerging Markets having trouble at resistance and looking toppy. Volatility ($VIX) looked to remain low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed that all looked good on the longer timeframe but the QQQ the strongest in the short term with the SPY close behind and the IWM the weakest.
The week played out with Gold pushing lower but still near 1300 while Crude Oil continued lower. The US Dollar shock off the toppiness and moved higher while Treasuries found support after a small pullback and reversed higher. The Shanghai Composite continues to flirt with a major resistance level while Emerging Markets stalled again at their 3 year resistance. Volatility fell back to the July lows paving the way for equities to move higher. The Equity Index ETF’s marched higher with the SPY making a new all-time high and the QQQ 14 year highs, but the IWM continued to lag. What does this mean for the coming week? Lets look at some charts.
The SPY continued where it left off and rose for 4 days before consolidating Friday. Along the way it made a new all-time high. The RSI on the daily chart is curling over with the doji print Friday but remains in the bullish zone and the MACD is continuing higher. Both support the doji resolving higher. The weekly chart shows follow through continuation higher off of the Hammer reversal two weeks ago. The RSI is rising and bullish with room to spare above and the MACD is turning back higher, approaching a positive cross. Very strong on this timeframe. There is no resistance higher but expect that the round number 200 could give it some pause and then there is a Measured Move higher to 208. Support lower may come at 199 and 198.30 before 196.50 and 195. Possible Consolidation in the Uptrend.
Heading into the last week of Summer the equity markets are looking strong and ready for more. Elsewhere look for Gold to continue lower in its intermediate term consolidation phase while Crude Oil continues lower. The US Dollar Index and US Treasuries look to continue to the upside. The Shanghai Composite also looks strong and is biased higher while Emerging Markets try to burn through past history near resistance and may consolidate for another week in their uptrend. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The QQQ’s continue to look very strong and are biased higher while the SPY is not quite as strong on the shorter timeframe and may need to consolidate. Both are at big round numbers that could stall any further move. The IWM looks to continue to improve in its 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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