SPY Trends and Influencers March 9, 2013

Last week’s review of the macro market indicators suggested, as the markets moved full force into March that Equities were looking more like a Lamb and the Dollar Index ($UUP) the Lion. Elsewhere Gold ($GLD) and Crude Oil ($USO) were set up to continue lower with a chance of Gold consolidating. US Treasuries ($TLT) were also consolidating within the short term downtrend. The Shanghai Composite ($SSEC) was back moving higher while Emerging Markets ($EEM) were biased to the downside with a risk of consolidation continuing from late this week. Volatility ($VIX) looked to remain low keeping the wind at the back of the Equity Index ETF’s $SPY, $IWM and $QQQ. Their charts continued to be biased to the upside but were adding topping candles on the weekly views. The Exception was the QQQ that was almost imperceptibly moving higher in the longer time frame. US Treasuries driving higher and joining a strong Dollar would be the most troublesome scenario for Equity bulls.

The week played out with Gold choosing the consolidation path while Crude Oil found a bottom and started a bounce. The US Dollar continued higher like a lion while Treasuries fell back lower hard. The Shanghai Composite got knocked back at the 20 day Simple Moving Average but found footing while Emerging Markets reversed to the upside within their channel. Volatility moved back down to the mid February lows keeping a strong wind at the back of the Equity Index ETF’s. Each moved higher with the IWM reaching new all time highs and the SPY and QQQ making new multi-year highs to end the week. 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 jumped higher Tuesday and rode above the expanding Bollinger bands the rest of the week higher. It ended the week with a Hanging Man doji, a possible reversal, but just over two points from the all time high from October 2007 at 157.52 and the price objective of the Inverse Head and Shoulders at 156.60. Dueling forces of the top and the doji. The Relative Strength Index (RSI) remains bullish and still has some room higher on the daily chart before it is overbought with the Moving Average Convergence Divergence indicator (MACD) moving higher as well. Bullish with a capital B. The weekly chart shows a bullish Marubozu candle running higher from the consolidation and up off of the ascending wedge. The target of the wedge break is to 177. The RSI on this time frame is becoming technically overbought but not near extreme with a MACD that is more troublesome as the signal line crosses above the September 2012 peak and nears the April 2012 and February 2011 peaks. It does not have to stop in this range but being turned back 4 times raises caution. For now price is going higher and that must be respected. There is only that 2007 top at 157.52 as possible resistance above and support lower comes at 153 to 153.25 followed by 150 and 147.30. Continued Uptrend with Some Caution.

Heading into the March Options Expiration Week the equity markets are feeling a bit euphoric. Elsewhere Gold looks to continue to consolidate with a downward bias while Crude Oil slowly decides if it wants to move back higher. The US Dollar Index seems strong like a lion while US Treasuries play the part of the lamb. The Shanghai Composite is set up to continue to trend lower in the longer scale uptrend while Emerging Markets consolidate with a bias to the upside. Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the strong moves higher recently. A reversal in US Treasuries could derail the Equity rally and it would not be a surprise if the SPY and IWM consolidated or pulled back a bit in their trends higher. 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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