SPY Trends and Influencers February 9, 2013

Last week’s review of the macro market indicators suggested, heading into the first full week of February that the markets have their bull on. Gold ($GLD) looks to have stayed off a fall and will consolidate while Crude Oil ($USO) continues higher. The US Dollar Index ($UUP) is moving lower again and US Treasuries ($TLT) are joining it to the downside. The Shanghai Composite ($SSEC) is racing higher again after some consolidation and Emerging Markets ($EEM) are biased to the upside but consolidating. Volatility ($VIX) remains near historic lows and showing no signs of rising elevated keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The weakening US Dollar and Treasuries support higher equity prices as well. And the charts of these ETF’s agree, with the QQQ looking to finally join the party higher. Use this information as you prepare for the coming week and trad’em well.

The week played out with Gold consolidating and Crude Oil also consolidating after a bounce off of resistance. The US Dollar ended its move lower and rebounded while Treasuries moved sideways at their lower level. The Shanghai Composite founds its next resistance and began another round of consolidation while Emerging Markets leaked out of their consolidation lower before finding support late in the week. Volatility leapt higher only to be pulled back down by the end of the week. The Equity Index ETF’s continued in their ranges until all broke out of them higher on Friday with the SPY and IWM making new multi-year highs, but maybe more noticeable the QQQ breaking a very long tight range. 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 d
SPY Weekly, $SPY
spy w

The SPY consolidated for most of the week before breaking higher Friday and ending the week at new 5 year highs. The RSI on the daily chart is strong and bullish, with some room higher after working off a technically overbought condition and the MACD is holding after flat lining on the histogram, refusing to move into negative territory. The price objective from the Inverse Head and Shoulders at 156 and the Measured Move to 155 are now the upside targets. The weekly picture shows a peek over the top of the rising wedge along the expanding Bollinger band. The RSI is also strong and bullish on this timeframe with a MACD that is bullish and rising on both the signal line and the histogram. This train does not look like it is ready to pull into the station yet. Support lower is at 150 and then 147.10. Continued Uptrend.

Heading into February Options Expiration week the bull market continues to chug along and get stronger from some perspectives. Gold looks to continue in its tightening range awaiting a break out while Crude Oil pulls back in the uptrend. The US Dollar Index is looking to test the upside of the broad range while US Treasuries are biased lower. The Shanghai Composite is biased to the upside in its consolidation while Emerging Markets are testing the limits of how long a bull flag can run before turning into a downtrend. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agree with new 5 year highs for the SPY and all time highs for the IWM but most interesting a breakout of the range higher for the QQQ. It is unusual, but not unprecedented, for the Dollar Index to continue higher as Equities rise so keep an eye on that as your risk for a reversal. Use this information as you prepare for the coming week and trad’em 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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