SPY Trends and Influencers, June 11, 2016
- Posted by Greg Harmon
- on June 11th, 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 which heading into the first full week of June saw the Equity Indexes looking solid. Elsewhere looked for Gold ($GLD) to bounce higher in consolidation while Crude Oil ($USO) consolidated its move higher, holding at the round number 50. The US Dollar Index ($UUP) looked better to the downside short term in its broad consolidation while US Treasuries ($TLT) were strong and looked to move higher.
The Shanghai Composite ($ASHR) had a short term bias higher and might have broken a long term pattern to the upside while Emerging Markets ($EEM) continued to move up. Volatility ($VXX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. There charts showed some variation in the short run with the IWM leading to the upside, perhaps catching up, while the QQQ had a short term upward bias in consolidation and the SPY looked to be muddled in consolidation after its move higher.
The week played out with Gold continuing higher, while Crude Oil started higher as well but fell back late in the week. The US Dollar found support at a higher low while Treasuries moved up to new 16 month highs. The Shanghai Composite held in a sideways consolidation over 2900 while Emerging Markets finally met some resistance and pulled back at the end of the week.
Volatility made a new two month low to start the week before rebounding slightly, poking above the recent channel. The Equity Index ETF’s started the week moving higher. The QQQ gave that up first moving down Tuesday and ending the week lower with the IWM and the SPY joining Thursday and ending near flat. What does this mean for the coming week? Lets look at some charts.
SPY Daily, $SPY
The SPY started the week with a Hanging Man candle, but in a range. This can be a reversal candle but it did not confirm. In fact the SPY moved higher Tuesday and continued Wednesday, closing at the highest level since July 2015. That was it for the week though as it pulled back Thursday and then gapped lower and held at 210 Friday, ending the week nearly unchanged. No new high.
The daily chart shows the April high area acting as support for now. It also shows the RSI falling, but in the bullish zone, while the MACD is rolling but has not crossed. The shorter SMA’s continue to point higher while the Bollinger Bands® are giving room to the upside. On the weekly chart a second doji candle around 210, and with the large open interest at 210 in the June Expiry Options for next week it could quite possibly be three in a row.
The RSI on the weekly chart is running flat just under 60, where it would turn bullish. The MACD is rising though, supporting a move higher. There is resistance at 210.75 and 211.50 followed by 213 and then the all-time high at 213.78. Support lower stands at 208.50 and 207.60 followed by 206 and 203.75. Consolidation of the Upward Move Continues.
SPY Weekly, $SPY
Heading into June Options Expiration week and the FOMC meeting the equity indexes are taking a little breather to the downside, after big moves. It would be troublesome if it turns into more. Elsewhere look for Gold to continue higher in the short term while Crude Oil continues its trend higher. The US Dollar Index continues to trend lower in the short term in broad consolidation while US Treasuries are breaking out higher. The Shanghai Composite continues to hold steady in the downtrend and Emerging Markets are biased to the downside short term in their broad consolidation.
Volatility looks to remain low but may creep up a bit keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but with less support that previously. Their charts are set to continue to digest the recent moves higher, with the QQQ weakest and then the IWM and the SPY holding well on the longer term charts. 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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