SPY Trends and Influencers February 25, 2012

• Posted by Greg Harmon
• on February 25th, 2012

Last week’s review of the macro market indicators looked heading into the week that Gold ($GLD) might continue to be an enigma, consolidating in a intermediate term downtrend in a long term uptrend, while Crude Oil ($USO) was breaking higher and looked to continue. The US Dollar Index ($UUP) and Treasuries ($TLT) were in consolidation zones but both were biased lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked ready to continue higher with Emerging Markets perhaps consolidating. The Volatility Index ($VIX) looked to remain low and perhaps test the low support. These influencers created an atmosphere for the Equity Index ETF’s, $SPY, $IWM and $QQQ to continue higher and their charts generally agreed, with the exception of the IWM that might consolidate or pullback.

The major move of the week goes to Gold breaking the consolidation higher and following the trend continued by Crude Oil, both ending near the highs. The US Dollar drifted lower while Treasuries turned into the new enigma continuing to hold their support levels and drifting higher. The Shanghai Composite drifted higher before busting a move Friday while Emerging Markets consolidated. Volatility moved back lower towards support. The Equity Index ETF’s held higher with the SPY establishing a new higher range for the week and the QQQ joining higher on Friday. The IWM recovered from an early week selloff to bounce back to the top of its range. All in all pretty true to the read presented from the price action. 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 held the move higher that closed last week over 136 but ending with a doji Friday, signaling indecision, just under the target from the Inverse Head and Shoulder n the daily chart at 137.14. The RSI is strong and bullish while the MACD is negative but nearly zero and flat on the daily chart. All of the SMA’s are trending higher except the 200 day SMA. The short term trend remains higher. On the weekly chart that Fibonacci Fan line is still ruling the roost as price rides it higher. The RSI on this timeframe is bullish and trending higher and continues to grow more positive. Both support more upside. Resistance comes at 139.45 and 143 higher, while support on a pullback is found at 134 and 128. Continued Upside.

Heading into the last week of February the market looks similar to last week with a few changes. Gold looks strong and ready to continue higher as Crude Oil may pause in its upward move. Both US Treasuries and the US Dollar Index looks better to the downside with a continued move lower by the Dollar likely. The Shanghai Composite and Emerging Markets both look better to the upside with the Chinese market likely to continue its move upward. The Volatility Index may not drop much more if at all but looks unlikely to rise soon either. These influencers create an environment for the Equity Index ETF’s SPY, IWM and QQQ to continue higher and the charts of the SPY and QQQ support the intra-market view. The IWM is biased higher, but needs to break a consolidation range before it can travel higher. A major move lower by the US Dollar or a breakdown by US Treasuries could accelerate Equities higher. Use this information as you prepare for the coming week and trade’m well.

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