SPY Trends and Influencers May 11, 2013

Last week’s review of the macro market indicators suggested, as we head into next week to look for Gold ($GLD) to continue its consolidation with a downside bias while Crude Oil ($USO) worked higher in the neutral zone. The US Dollar Index ($UUP) looked better lower while US Treasuries ($TLT) were biased lower within the longer uptrend. The Shanghai Composite ($SSEC) was at support but looked better for a break lower while Emerging Markets ($EEM) were looking strong. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, despite their moves higher to new highs. Their charts agreed and pointed higher, but looked better on the weekly timeframe as the daily views showed some signs of being extended with Friday’s moves.

The week played out with Gold consolidating before a fall Friday while Crude Oil continued to mover higher but at a slower pace than before. The US Dollar remained stable before a push higher to end the week while Treasuries continued lower. The Shanghai Composite continued to muddle in a tight range while Emerging Markets found a top and pulled back to end the week. Volatility continued to hold at the lows made to end last week as the Equity Index ETF’s rose to new highs with the SPY and IWM making all-time highs and the QQQ the best it has been in over 12 years. 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 continued higher to start the week before consolidating to end it at a new all-time closing high. The run from the base at 160 to this consolidation makes for a Measured Move higher to 167.50 should it break up again. There is still the Measured Move to 164.53 before that and nearby. The Relative Strength Index (RSI) is strong, bullish and rising with a Moving Average Convergence Divergence indicator (MACD) that is rising on the signal line and the flattening on the histogram. These support more upside but note that the MACD is getting to extreme levels where it has pulled back previously. The weekly chart shows a continued movement out of the consolidation that occurred after breaking the rising wedge. The RSI is rising and straddling the technically overbought line, but not near extreme, with a MACD that is rising on the signal line and histogram. The signal line is getting to lofty levels on this view as well. There is support lower at 159.72 and then 156.80 followed by 153.60. Below that and the bears will be happy. Continued Uptrend.

Heading into the options expiration week for May the equity markets remain strong. Look for Gold to continue its correction while Crude Oil may consolidate with an upside bias. The US Dollar Index seems content to move sideways but now with a upward bias as US Treasuries move lower in the broad consolidation zone. The Shanghai Composite is building towards a break of consolidation higher while Emerging Markets look to pullback in their uptrend. Volatility looks to remain subdued keeping the wind at the backs of the equity index ETF’s SPY, IWM and QQQ, despite their moves to new highs. Their charts agree with a continued upward bias but with the IWM the strongest on the short term basis and the QQQ strongest on the intermediate term. Rotation into small caps may result. Use this information as you prepare for the coming week and trad’em well.

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