SPY Trends and Influencers January 23, 2016

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 with the closing of the January options expiration and the worst two week start to a year ever, equity markets did not look like they were done falling yet. Elsewhere Gold ($GLD) was biased higher in its downtrend while Crude Oil ($USO) consolidated in its downtrend. The US Dollar Index ($UUP) continued to move sideways but with an upward bias while US Treasuries ($TLT) were biased higher. The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) were biased to the downside with the Chinese market possibly ready to consolidate.

Volatility ($VXX) looked to remain elevated and with an upward bias keeping the bias lower for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts agreed and look better to the downside on both the daily and weekly timeframes. The IWM crossed into a bear market and looked the worst. The QQQ was down over 15% but still holding best over the August and September lows, while the SPY had held the closest to its all time high but was precariously perched heading into the week.

The week played out with Gold pushing higher but stick near 1100 while Crude Oil started lower but also rebounded late in the week. The US Dollar moved slightly higher holding near the highs while Treasuries ran higher early in the week but gave some back Thursday and Friday. The Shanghai Composite found some footing after retouching 2850 and moved sideways while Emerging Markets started lower and found some support for a bounce as well.

Volatility started the week elevated and pulled back some to end lower but still not in the normal range. The Equity Index ETF’s started the week flirting with a bounce but gave that thought up quickly and hit new lows mid week before a bid came in and drove them higher to end the week up. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY
spy d

The SPY started the week jumping higher, looking to confirm the reversal the Hammer suggested last Friday. It weakened intraday Tuesday though printing a Solid Black Candle. This is a higher close but with weak daily action. Technically this confirmed the Hammer as a reversal higher, but the weak action was suspect. Wednesday followed through to the downside making a nearly 2 year intraday low in the process. The Hammer on the day with the long lower shadow was confirmed higher Thursday and then it followed through higher Friday to end the week up over 1.4%.

The daily chart shows a RSI rising up off of oversold levels and the MACD curling up towards a cross. Volume on the move Friday was relatively weak though. On the weekly chart the price printed a Hammer and a possible triple bottom. People will tell you triple bottoms do not exist. The RSI on this timeframe is turning back higher, still bearish, with the MACD falling. There is support lower at 189.50 and 188 followed by 187 and 184.60. Resistance higher comes at 191.50 and 194.50 followed by 196 and 198.50. Bounce in the Downtrend.

SPY Weekly, $SPY
spy w

Heading into the last week of January equity markets seem to have found some footing but have to prove themselves. Elsewhere look for Gold to move higher in its downtrend while Crude Oil bounces and shows us if it wants a reversal. The US Dollar Index is on the edge of a break out higher while US Treasuries are biased lower short term in the move higher. The Shanghai Composite is consolidating in the downtrend while Emerging Markets pause in their move lower.

Volatility looks to remain elevated but drifting lower keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ, but loosening the vice grip. The ETF’s themselves all look to continue the bounce in their downtrends with some work left to show that the worst is over. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview January 22, 2016

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