SPY Trends and Influencers October 31, 2015
- Posted by Greg Harmon
- on October 31st, 2015
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 suggested heading into the last week of October, the equity markets were looking strong.
Elsewhere looked for Gold ($GLD) to continue lower in its longer term downtrend while Crude Oil ($USO) headed lower in the short term. The US Dollar Index ($UUP) was breaking to the upside while US Treasuries ($TLT) were marking time sideways. The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) were biased to the upside with Emerging Markets at a major resistance level.
Volatility ($VXX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY and QQQ had major moves and looked set up to continue higher into next week with the IWM lagging and at resistance.
The week played out with Gold slowly rolling higher in a fake out move before dumping late in the week while Crude Oil started lower but found support and rallied late in the week. The US Dollar pushed higher but gave it back to end the week while Treasuries fell out of consolidation and pulled back. The Shanghai Composite marked time around 3400 while Emerging Markets pulled back from resistance.
Volatility held in a low range, an uneventful week. The Equity Index ETF’s halted started the week digesting last week’s move up, but then found some strength and pushed higher mid week. The SPY and the QQQ held the gains but the IWM gave half back, still lagging. What does this mean for the coming week? Lets look at some charts.
SPY Daily, $SPY
The SPY started the week over the 200 day SMA for the first time since August 19th and maintained that all week. It pulled back to the 200 day SMA Tuesday and reversed hard Wednesday following the FOMC statement. Thursday held at that level and Friday was strong until late day profit taking. That ended the week with a bearish engulfing candle.
The RSI on the daily chart hit 70, the typical overbought level, and pulled back slightly while the MACD is rising. The divergence and candles suggest that a short term pullback or consolidation could ensue. The weekly picture shows a higher week and progress on the momentum indicators. The RSI continued higher over the mid line with the MACD crossed up and rising. These support more upside.
There is resistance at 208.40 and 209.25 followed by 210.25 and 211 before 212.50 and 213 then 213.80. Support lower comes at 206.40 and 204.40 followed by 201.75. Possible Pullback or Consolidation in the Uptrend.
SPY Weekly, $SPY
Heading into November the equity markets have regained a lot of ground lost over the summer but are mixed. Elsewhere look for Gold to move lower while Crude Oil consolidates with an upward bias. The US Dollar Index is biased to the upside in consolidation while US Treasuries look to mark time sideways. The Shanghai Composite looks to continue consolidation around 3400 with an upward bias while Emerging Markets are biased to the downside.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are mixed though. The QQQ remains the strongest and within a day’s move to new all-time highs, while the SPY seems extended and may need to consolidate or pullback first. The IWM continues to lag and is mired in consolidation. 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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