SPY Trends and Influencers August 11, 2012

Last week’s review of the macro market indicators saw heading into the dog days of August that the markets were looking better. Gold ($GLD) and Crude Oil ($USO) were poised to consolidate with a bias for an upside move on a break. The US Dollar Index ($UUP) and Treasuries ($TLT) seemed content to move continue to pullback in their uptrends. The Shanghai Composite ($SSEC) really looked ugly but might have a reprieve for a few days and Emerging Markets ($EEM) were poised to move higher. Volatility ($VIX) looked to remain low and possibly make new lows setting the stage for the Equity Index ETF’s $SPY, $IWM and $QQQ, to continue to run higher. The inter-market view with the lower bias for Treasuries and the US Dollar, and higher bias for Crude Oil also supported more upside for Equities.

The week played out with Gold and Crude Oil moving to the upside stronger in Gold. The US Dollar and Treasuries seem to have found a bottom and consolidated. The Shanghai Composite took that reprieve and moved higher joining Emerging Markets to the upside. Volatility consolidated before making a new 5 month low. The Equity Index ETF’s all rose and then consolidated with the favorable backdrop. What does this mean for the coming week? Let’s 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 continued to move higher slowly, ending the week with a strong candle. The Relative Strength Index (RSI) on the daily chart shows a new high with a trend higher in bullish territory and the moving Average Convergence Divergence indicator (MACD) is positive and continuing to grow. Signs point higher on this time frame. The weekly view shows a strong trend off of the June lows with a rising, bullish and supportive RSI and a MACD that has trended higher and turned to positive. This looks very positive. There is resistance higher at 141.48 and 142.28 followed by a Measured Move higher to 153.60. Support lower comes into play at 137.90 and 135 followed by 134.12 and 131.46. Continued Uptrend.

Heading into the new week it looks like more of the same. Gold and Crude Oil are better to the upside with Oil stronger and Gold having a chance of consolidation. The US Dollar looks to continue to pullback int he uptrend with Treasuries possibly moving higher in the short run, within a pullback. The Shanghai Composite and Emerging Markets are poised to continue higher, at least in the short run for the Chinese market. Volatility looks ready to test the lows of 2005 through 2007. This creates a very positive backdrop for the Equity Index ETF’s. The charts of the SPY and QQQ agree with the inter-market view, while the IWM looks like the best of the three to consolidate the recent gains. 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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