SPY Trends and Influencers January 12, 2013

Last week’s review of the macro market indicators suggested, as the financial markets got back to full strength to look for Gold ($GLD) to continue lower while Crude Oil ($USO) continued higher. The US Dollar Index ($UUP) seemed ready to continue higher while US Treasuries ($TLT) headed lower, with a chance that each may consolidate. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to the upside with the possibility that each may also rest. Volatility ($VIX) looked to remain low and may continue lower keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, despite the big moves higher last week. Their charts all looked higher as well with the IWM the strongest followed by the SPY and the QQQ pulling back or possibly consolidating.

The week played out with Gold mocking the charts and moving higher only to give it back Friday while Crude Oil basically consolidated. The US Dollar held higher until a crash down late in the week while Treasuries held lower. The Shanghai Composite consolidated its gains while Emerging Markets gave up some of their gains, and tested support. Volatility continued at unusually lower levels for recent history. The Equity Index ETF’s continued higher with the SPY, IWM and QQQ all finishing near the highs 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 moved higher out of consolidation from the break above what is now downtrending support. This is also the neckline of an Inverse Head and Shoulders pattern with a price objective of at least 156.75. The back to back Hanging Man candles raise caution for a pullback going into next week, but the Relative Strength Index (RSI) is bullish and strong with a Moving Average Convergence Divergence indicator (MACD) that is positive. These support further upside. On the weekly chart the move higher in the wedge is expanding the Bollinger bands with a rising and bullish RSI and a MACD that has crossed to positive. This looks quite bullish. There is resistance here at 147.16 and 148.11 before free air higher toward that Inverse Head and Shoulders target. Support lower is found at 144.44 and 142.70 followed by 139.50. A move under that invalidates the pattern and shifts the trend to lower. Uptrend Continues with a Chance of Consolidation.

Heading into next week the broad markets continue to look good but with some caution creeping in. Gold May be bottoming but needs to prove it while Crude Oil continues the trend higher. The US Dollar Index looks to move in a tight range with a downside bias while US Treasuries are biased higher in the downtrend. The Shanghai Composite is finally taking a breather and looks better lower with Emerging Markets consolidating but biased to the upside. Volatility looks to remain subdued and may even move lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agree with the SPY and IWM the strongest and the QQQ’s lagging a bit. Use this information as you prepare for the coming week and trade’m well.

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