SPY Trends and Influencers September 22, 2012

Last week’s review of the macro market indicators saw, heading into the next week, that the markets looked strong but perhaps a bit extended. Gold ($GLD) and Crude Oil ($USO) looked ready to continue their moves higher with a possibility that Gold consolidates first. The US Dollar Index ($UUP) and US Treasuries ($TLT) were poised to continue lower, with Treasuries having the best chance for a bounce. The Shanghai Composite ($SSEC) seemed bound by the 50 day SMA while Emerging Markets ($EEM) were biased to the upside but at major resistance. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. With the moves higher, each could be forgiven if they consolidated or had a slight pullback first and their charts did have some signs of being extended on the short run.

The week played out with Gold holding at its highs while Crude Oil pulled back hard but stabilized later in the week. The US Dollar Index is trying to bottom while Treasuries rebounded slightly. The Shanghai Composite continued back down making a new lower low while Emerging Markets gave up some of their gains before moving back higher to end the week off the lows. Volatility continued to hold at the lows remaining subdued. The Equity Index ETF’s consolidated their gains in bull flags, each trying to move higher Friday but failing to break. 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.)

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY spent the week consolidating in a bull flag at the highs, continuing the stair step pattern of the last 6 weeks. The RSI on the daily timeframe is slightly overbought but working that off through time and the MACD is positive, but fading. This happens to the MACD in a flag. The weekly picture shows the doji at the highs with a strong and bullish RSI and a MACD that is positive and growing. This looks like a healthy trend higher. Support below comes at the 144 and 141.80 followed by 140.80 and 140. Above the previous high there are targets from Measured Moves to 147.70 and 149.07. Consolidation with an Upward Bias in the Uptrend.

Heading into the first week of Autumn the market remain strong but with a few caution flags showing up. Gold looks to continue higher with Crude Oil continuing to pullback in the uptrend. The US Dollar Index continues to look week despite consolidating this week while US Treasuries consolidate with a bias lower. The Shanghai Composite looks horrible making new lows and nothing positive in the charts with Emerging Markets consolidating at resistance in the uptrend. Volatility looks to remain low paving the way for the equity index ETF’s SPY, IWM and QQQ, to continue higher. This is supported by the view of a lower Dollar Index and lower Treasuries. The Index ETF’s themselves all appear strong and held through Options Expiration, but may continue to consolidate. Use this information as you prepare for the coming week and trade’m well.

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