SPY Trends and Influencers April 21, 2012

Last week’s review of the macro market indicators saw heading into the height of earnings season the mood had turned a bit more bearish. Gold ($GLD) continued to look better to the downside, but would not surprise if it hovers while Crude Oil ($USO) looked better lower in the very short term within the uptrend. The US Dollar Index ($UUP) and US Treasuries ($TLT) continued their upside bias. The Shanghai Composite ($SSEC) was verging on moving from an upside bounce to a uptrend while Emerging Markets ($EEM) looked like the consolidation might be ending with resolution to the downside. The Volatility Index ($VIX) solidly confirmed that the bottom was in and the bias was to the upside. These influencers created a mosaic giving the Equity Index ETF’s $SPY, $IWM and $QQQ a downward bias and their charts in general agreed. The SPY looked to be the most vulnerable for a further fall with the IWM showing a bit more stability as it moved lower fastest and the QQQ still the strongest, but cracking.

The week went with Gold running lower into support and Crude Oil holding in a range. The US Dollar Index moved mostly sideways with US Treasuries holding the gap higher and drifting up. The Shanghai Composite did continue higher with Emerging Markets holding in the lower end of their recent range. The Volatility Index drifted back lower, but basically stayed stable. With all of the influencers moving in a range it is not surprising that the Equity Index ETF’s did the same. 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 Weekly, $SPY

The SPY consolidated in a range above the rising 50 day Simple Moving Average (SMA) in a bear flag. Capped by the falling 20 day SMA the range is tightening building energy. The Relative Strength Index (RSI) on the daily time frame continues to rebound higher with a Moving Average Convergence Divergence (MACD) that is improving but with a slowing pace as it approaches the zero line. A neutral to lower bias on this timeframe. The weekly chart shows a tighter doji with diverging indicators. The RSI is bullish and turned back higher with a MACD that is about to cross negative, boding for downside. There is resistance higher at 139.25 and 142.21. Above that load up the truck. Support lower comes at 138.50 and 136 followed by 133.80 and 130.30. Continued Consolidation with Downside Short Term Bias in Long Term Uptrend.

Heading into the last full week of April the markets still looks broadly biased to the downside. Gold may have found a bottom while Crude Oil may be ready to move back higher. The US Dollar Index is consolidating and shows no desire to move hard either way while Treasuries show if they really want more upside. The Shanghai Composite is in baby bull mode with Emerging Markets continuing to leak lower. The Volatility Index shows no signs of powering higher yet. These influencers line up to support downside or consolidation. The charts of the Equity Index ETF’s SPY, and QQQ agree with this diagnosis on a short term basis but the IWM is looking a bit better with potential to break consolidation higher. Use this information as you prepare for the coming week and trade’m well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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