SPY Trends and Influencers August 31, 2013

Last week’s review of the macro market indicators suggested, as the unofficial last week of Summer began, that Gold ($GLD) looked to continue higher while Crude Oil ($USO)rose in the consolidation zone. The US Dollar Index ($UUP) seemed to have found a bottom and should bounce while US Treasuries ($TLT) were bouncing but biased lower. The Shanghai Composite ($SSEC) looked to drift lower and Emerging Markets ($EEM) were biased to the upside in the very short term. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts saw some upside with the QQQ strongest and IWM next and SPY still needing to prove that the pullback was over.

The week played out with both Gold and Crude Oil moving higher before a pullback late in the week. The US Dollar did bounce late in the week but then retraced while Treasuries continued modestly higher. The Shanghai Composite continued to muddle along in a tight range while Emerging Markets took another gap lower and tried to fill it all week. Volatility bounced off of the lows but remains at subdued level. The Equity Index ETF’s all gapped lower and then consolidated the rest of 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 took it on the chin right from the start of the week. Going into it with a bullish looking short term set up, it printed a Bearish Engulfing Candle Monday and confirmed that with a gap lower Tuesday, under the 100 day Simple Moving Average (SMA). The rest of the week was spent in consolidation around that 100 day SMA, finishing below it. The daily chart shows the Relative Strength Index (RSI) moving sideways in bearish territory with a Moving Average Convergence Divergence indicator (MACD) that is heading lower. The histogram though is slowly improving. The 61.8% retracement of the Shark down to 161.55 is the next target lower on that pattern as well and coming close. On the weekly picture the picture is looking lower as well but not nearly as grim. The RSI is making a new low but remains in bullish territory. Watch this as the price is not making a new low and any reversal before 155.73 would trigger a Positive RSI Reversal looking for a new all time high. It is also at support of the rising trendline from November. On the bad side of the ledger the weekly Bearish Engulfing Candle signals lower if confirmed next week and the MACD is making new lows and heading down. It is premature to call for it but the SPY has not seen the 50 week SMA since November. There is support lower at 163 and 161.60 followed by 160.20 and 158.10. A break below 155.73 turns this into a lasting bearish downturn. Resistance higher comes at 164.50 and 166 followed by 167.45. Over that and a gap fill to 168.70 brightens the smiles of many bulls. Downside Short Term Bias in the Long Term Uptrend.

As September begins look for Gold to continue to bounce in its downtrend while Crude Oil rises with a chance of consolidation. The US Dollar Index looks to be reversing higher while US Treasuries are biased higher in the short term in their downtrend. The Shanghai Composite looks to continue to consolidate with an upward bias as Emerging Markets are poised to move lower. Volatility looks to remain subdued but creeping higher keeping the wind at the backs of the equity index ETF’s SPY, IWM and QQQ, despite the moves lower this week. Their charts suggest that the downside is not over yet though with the SPY and IWM looking lower while the QQQ looks the strongest and most likely to just consolidate instead of falling. Use this information as you prepare for the coming week and trad’em well.

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