SPY Trends and Influencers August 24, 2013

Last week’s review of the macro market indicators suggested, starting the September options cycle that the equity markets looked weak and heavy. Gold ($GLD) looked to continue to rise in the downtrend while Crude Oil ($USO) just chugged higher. The US Dollar Index ($UUP) seemed poised to move lower along with US Treasuries ($TLT). The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to continue to the downside with risk of the Emerging Markets consolidating first. Volatility ($VIX) looked to remain low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, but their charts suggested more pullback. The QQQ was the strongest of the bunch and might just consolidate.

The week played out with Gold ripping higher while Crude Oil consolidated in a a brad bull flag. The US Dollar found a bottom while Treasuries sank, with a rebound to end the week. The Shanghai Composite continued to drift lower in a bear flag while Emerging Markets found a bottom and bounced. Volatility moved back lower through most of the moving averages. The Equity Index ETF’s found a bottom and bounced, but have not closed the gaps. 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 to work lower early in the week before finding some support around the 38.2% retracement of the bearish Shark. A fine place to reverse, if it chooses to. The Relative Strength Index (RSI) bottomed on the daily chart at about the same place as it did in June and is rising with a Moving Average Convergence Divergence indicator (MACD) that is improving on the histogram and starting to level on the signal line. The move higher to end the week is promising, but the Doji Star, signals indecision, and could resolve either way. A close over the 50 day Simple Moving Average (SMA) was a good sign though, after only a minimal break. Out on the weekly chart the pullback found support at the rising trend line with a Hammer. It needs to be confirmed next week to be a reversal but the RSI is holding now firmly in bullish territory. The MACD though looks to be headed lower though. Conflicting signals on this time frame. There is resistance higher at 167.45 and then 168.40 followed by 170 and 171, with a Measured Move higher to 179.43 over that. Support is found lower at 165.75 and 164.50 followed by 163 and 161.60 before 160.20. Consolidation or Bounce in the Pullback within the Uptrend.

As the unofficial last week of Summer begins look for Gold to continue higher while Crude Oil rises in the consolidation zone. The US Dollar Index seems to have found a bottom and should bounce while US Treasuries are bouncing but biased lower. The Shanghai Composite looks to drift lower and Emerging Markets are biased to the upside in the very short term. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts see some upside with the QQQ strongest and IWM next and SPY still needing to prove the pullback is over. Use this information as you prepare for the coming week and trad’em well.

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