SPY Trends and Influencers March 26, 2016

• Posted by Greg Harmon
• on March 26th, 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 with Options Expiration behind and a short week ahead of Easter coming saw the Equity Indexes looking strong. Elsewhere looked for Gold ($GLD) to continue higher along with Crude Oil ($USO). Both showed risk of a short term pullback. The US Dollar Index ($UUP) looked to test the bottom of the consolidation range while US Treasuries ($TLT) continued lower in their wedge.

The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) were biased to the upside with risk of the Emerging Markets running a little lower first. Volatility ($VXX) looked to remain subdued and biased lower keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts looked strong, especially on the weekly timeframe. With the SPY finally over its 200 day SMA and late week action suggesting possible rotation into the IWM to come next.

The week played out with Gold reversing lower along with Crude Oil, bucking their trend higher. The US Dollar found support and moved higher while Treasuries tested a push out of their downtrend. The Shanghai Composite consolidated while Emerging Markets pulled back. Volatility found a bottom and tried to move higher.

The Equity Index ETF’s started the week consolidating at the prior week’s highs, and then digested with a pullback. This resulted in the SPY falling back to the 200 day SMA, and the IWM and QQQ dropping back from contact with their 200 day SMA’s. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into the week following an inside doji to end the prior week. That proved to be unimportant as it moved sideways in a narrow range the next day. Wednesday saw a crack to the downside and follow thorough Thursday, touching the 200 day SMA. It held there and moved higher, the rest of the day, finishing on the high and with a bullish Hollow Red Candle. The Hollow Red Candle shows intraday strength and will have many leaning higher next week.

The RSI on the daily chart is bullish but leveling and the MACD is looking to cross down, a bearish signal. Mixed views on this timeframe. On the weekly chart the SPY printed an inside week and held over the 100 week SMA. Note that the volume has trended lower over the entire run higher, thought to be a sign of a weak bounce, as it currently sits at a lower high.

But it has not reversed yet and the MACD is running higher, but with the RSI leveling just over the mid line, where it has stalled before. There is resistance higher at 203.75 and 206 followed by 207.60 and 208.50. Support lower comes at 201.5 and 200 followed by 199 and 198.5 before 196. Pullback in the Intermediate Uptrend May Continue.

SPY Weekly, $SPY

Heading into the end of the first Quarter the run up in equities seems to have exhausted at least in the short term. Elsewhere look for Gold to continue to pullback in its uptrend while Crude Oil does the same, but with a possible bounce. The US Dollar Index continues higher in the consolidation range while US Treasuries may be breaking their downtrend to the upside.

The Shanghai Composite looks better to the upside in the downtrend while Emerging Markets are biased to the downside in their uptrend. Volatility looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest the recent uptrend may be exhausting though with the SPY lading to the downside followed by the QQQ and the IWM consolidating. Use this information as you prepare for the coming week and trad’em well.

 

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