SPY Trends and Influencers April 29, 2012

Last week’s review of the macro market indicators saw heading into the last full week of April the markets still looking broadly biased to the downside. Gold ($GLD) might have found a bottom while Crude Oil ($USO) appeared ready to move back higher. The US Dollar Index ($UUP) was consolidating and showed no desire to move hard either way while Treasuries ($TLT) needed to show if they really want more upside. The Shanghai Composite ($SSEC) was in baby bull mode with Emerging Markets ($EEM) continuing to leak lower. The Volatility Index ($VIX) showed no signs of powering higher yet. These influencers lined up to support downside or consolidation. The charts of the Equity Index ETF’s $SPY, and $QQQ agreed with this diagnosis on a short term basis but the $IWM was looking a bit better with potential to break consolidation higher.

Gold did scoot along the bottom before rising late in the week while Oil moved higher into resistance. The US Dollar continued to consolidate early in the week before leaking lower to end it with Treasuries holding their previous gap up levels all week but not advancing. The Shanghai Composite continued a drift higher towards its first major resistance while Emerging Markets moved towards the top of the down channel. Volatility fell back lower to support easing the way for the Equity Index ETF’s to recover from a move lower to start 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 Weekly, $SPY

The SPY started the week lower but found support at the double bottom near 136, printing a Hollow Red Hammer Candle. After confirming it higher Tuesday it never looked back running over the previous flag top and the 20 day SMA. The RSI on the daily chart is moving back higher after holding in bullish territory on the dip and the MACD crossed positive, both supporting further upside. The weekly picture shows a long white bullish engulfing candle ending near the tops of the real bodies of the previous high candles at 140.83. The RSI is strong and moving higher and the MACD is averting a negative cross. These also support more upside. Resistance is found higher at 142.21 and then a full retracement of the down move to 143.02. Above that a Measured Move to near 155 would be a target, near a 123.6% Fibonacci extension of that move lower, at 161.97. Support continues at 136 and 134 followed by 130. Continued Uptrend.

Heading into next week the broad market is looking very bullish again. Gold and Crude Oil are poised to continue higher with a chance that Gold digests its recent gains. The US Dollar Index looks better to the downside and Treasuries look to be contained back in the previous consolidation zone. The risk there is to the upside for Treasuries. The Shanghai Composite continues to flirt with a major break out and looks better to the upside with Emerging Markets stuck in a downward channel. Volatility retreated and is also set up better to the downside. Take away from that the upside risk is small. These influencers create a backdrop that supports more upside for the Equity Index ETF’s and their charts agree on both the short term and intermediate term timeframe. Use this information as you prepare for the coming week and trade’m well.

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