SPY Trends and Influencers December 14, 2013
- Posted by Greg Harmon
- on December 14th, 2013
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, as the week began that the equity markets looked positive but extended on the longer timeframes. It looked for Gold ($GLD) to continue lower or consolidate while Crude Oil ($USO) remained biased higher. The US Dollar Index ($UUP) looked to resume the downward path along with US Treasuries ($TLT), which were especially weak if they were to break support lower. The Shanghai Composite ($SSEC) looked strong while Emerging Markets ($EEM) carried a neutral bias for the week. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, with a move lower looking for new all-time highs in the indexes again. The index ETF’s remained biased higher but with caution. The QQQ was the most extended on the weekly time frame with the SPY next and the IWM the least worrisome.
The week played out with Gold bouncing higher then falling back while Crude Oil met resistance and pulled back. The US Dollar started lower but bounced to end the week little changed while Treasuries did the reserve, starting higher then pulling back. The Shanghai Composite pulled back to support in a narrow range while Emerging Markets moved back to last week’s lows. Volatility made a move higher but remains subdued. The Equity Index ETF’s pulled back with the IWM finding support while the SPY is testing support and the QQQ looking the weakest. What does this mean for the coming week? Lets look at some charts.
The SPY fell just short of making another new all-time high before pulling back back to the break out levels at 177.50 from early November. The 50 day SMA is close at hand in the daily chart. The RSI is moving lower through the mid line with the MACD falling. Things look lower on this timeframe. The weekly view shows a solid red candle pulling back after two topping reversal candles the last two weeks. The RSI on this timeframe is moving lower and has worked off the technically overbought condition but with the MACD turning lower towards a cross down. A bit weak on this timeframe as well. There is support lower at 177.65 and 176 followed by 175 and 173.60. Resistance higher comes at 178.50 and 180.40 before 181.75. Pullback in the Uptrend.
Heading into the last full week before the Holidays, the markets are looking tired and extended and better lower. Look for Gold to continue lower while Crude Oil turns the bias to lower in the short term. The US Dollar Index is trending lower but may be ready for a bounce while US Treasuries are biased lower. The Shanghai Composite is consolidating in the upward move and Emerging Markets are biased to continue to the downside. Volatility looks to remain subdued but with an upward bias keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest that there may be more downside for the QQQ and SPY, which are both at support, while the IWM creeps along trend support higher in what could still be a bear flag. 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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