SPY Trends and Influencers March 25, 2012

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

Last week’s review of the macro market indicators saw heading into next week the market providing some clarity. Gold ($GLD) looked to continue lower while Crude Oil ($USO) consolidated with an upward bias. The US Dollar Index ($UUP) looked better to the upside but Treasuries ($TLT) now were solidly biased lower. The Shanghai Composite ($SSEC) looked lower while Emerging Markets ($EEM) were poised to break higher out of a consolidation zone. The Volatility Index ($VIX) added some spice to the party and did not look to move markedly higher soon. These influencers built a backdrop for the US Equity Index ETF’s $SPY, $IWM and $QQQ to continue higher. An acceleration of Treasuries lower would only reinforce this. The charts of those Index ETF’s agreed with the SPY and QQQ looking the strongest and the IWM still working off some previous price history.

The week saw Gold and Oil both consolidate, with Gold testing lower before recovering. The US Dollar only drifted higher while Treasuries found support and bounced a bit. The Shanghai Composite did fall lower but held support while Emerging Markets fell to the bottom of their recent range. Volatility continued to hover at the lows. The Equity Index ETF’s finally pulled back on their runs higher with the QQQ holding out the longest. 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.)

strong>SPY Daily, $SPY

SPY Weekly, $SPY

The SPY finally pulled back within the long run higher and held just above the 20 day SMA. The RSI on the daily basis is turning higher after holding bullish while the MACD is about to cross negative. With the SMA all sloping higher there is no confusion about the trend being higher. The weekly chart shows bullish as well but with a RSI that kinked lower at the 70 level and a MACD that is slowly fading, a continued pullback is possible. The week held over the Fan Line and shows it nearing the 100% retracement of the move lower from 2007 to 2009. There is support lower at 137.50 and 136 followed by 134. Resistance on a bounce comes at 141.07 before the 2007 top and then a target of 161.97. Consolidation or Slight Pullback within Up Trend.

As the last week of the first quarter of 2012 comes around beware of window dressing buying potential in hot names. As for Gold it looks back to its old confusion, looking sideways in the intermediate term downtrend in the long term uptrend while Crude Oil consolidates in the 104.81-110 range with a bias higher. Both the US Dollar Index and US Treasuries are biased to the downside in the intermediate term but Treasuries may continue to rally short term. The Shanghai Composite looks to continue lower while Emerging Markets are at support and losing that will follow lower. The Volatility Index still has a harder road to move in the bias direction lower but shows no signs of rising anytime soon. These influencers create a backdrop for the US Equity Index ETF’s SPY, IWM and QQQ to continue to consolidate with in their bullish trends. Their charts tend to agree but this week the SPY and QQQ show signs that the pullback may continue. Use this information as you prepare for the coming week and trade’m well.

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