SPY Trends and Influencers February 11, 2017
- Posted by Greg Harmon
- on February 11th, 2017
A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.
Last week’s review of the macro market indicators saw following the first FOMC meeting of the year and the employment report, the Equity markets had a strong week and looked primed for the next leg higher. Elsewhere looked for Gold ($GLD) to continue in its short term uptrend while Crude Oil ($USO) churned with more sideways price action. The US Dollar Index ($DXY) looked to continue to the downside, although it was at a good support area should it want to reverse, while US Treasuries ($TLT) were biased lower.
The Shanghai Composite ($ASHR) looked to continue to drift around resistance but higher and Emerging Markets ($EEM) looked to continue their recent strength. Volatility ($VXX) looked to remain at exceptionally low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts all looked strong on the weekly timeframe and were at the edge of breaking out of ranges on the daily timeframe.
The week played out with Gold continuing higher early but reversing later while Crude Oil started lower but recovered by the end of the week. The US Dollar caught a bid and moved slightly higher while Treasuries played out like Gold, starting higher but then reversing and pulled back. The Shanghai Composite continued the slow move higher while Emerging Markets continued the upward path.
Volatility stayed in a very tight range at extremely low levels. The Equity Index ETF’s started the week mixed with the IWM falling and the SPY and QQQ flat, but by the end of the week all were up, with the SPY and QQQ at all-time highs and the IWM less than a point away. What does this mean for the coming week? Lets look at some charts.
SPY Daily, $SPY
The SPY came into the week sitting near the all-time high (ATH) after a push above the short consolidative pullback. It held there through Wednesday and then started higher. Thursday took it over 230 for the first time and to a new ATH. It followed that up with a second ATH Friday. The daily chart shows price breaking a range higher and with support from a rising and bullish RSI. It is just moving into overbought territory, but nowhere near extreme. The MACD is rising up off of the signal line and the Bollinger Bands® are opening and turned higher. It looks good on this timeframe.
On the weekly chart it was a strong candle higher closing near the high. The RSI on this timeframe is also strong and bullish with the MACD rising. There is a Measured Move above at 244. Bullish here too. There is no resistance above and support lower comes at 229.60 and 228.25 followed by 226.50 and 225. Large open interest next Friday at the 230 Strike could draw it back lower in the short term or prevent it from rising further. Continued Uptrend.
SPY Weekly, $SPY
Heading into February Options Expiration week the equity markets look strong if not moving towards getting overheated. Elsewhere look for Gold to continue in its uptrend while Crude Oil churns marking time. The US Dollar Index is looking stronger while US Treasuries consolidate in their downtrend. The Shanghai Composite and Emerging Markets both look strong and ready for more upside.
Volatility looks to remain at extremely low levels keeping the wind at the back of the equity index ETF’s SPY, IWM and QQQ. Their charts all look great and ready for more upside in the longer timeframe but the SPY and QQQ are getting a bit hot in the short term and may need a rest. Use this information as you prepare for the coming week and trad’em well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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