SPY Trends and Influencers December 28, 2013
- Posted by Greg Harmon
- on December 28th, 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, heading into the Christmas Holiday week, the markets had regained some strength. The week looked for Gold ($GLD) to continue lower while Crude Oil ($USO) kept moving higher. The US Dollar Index ($UUP) looked better to the upside while US Treasuries ($TLT) were biased lower but in consolidation. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to the downside with risk of the Chinese market turning very ugly. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their individual charts suggested more upside with the IWM looking strongest, followed by the SPY. The QQQ strong trend remained but it looked a bit extended.
The week played out with Gold finding support and bouncing higher while Crude Oil continued higher. The US Dollar was fairly stable while Treasuries ended the week making a lower low. The Shanghai Composite may have found support, bouncing Friday while Emerging Markets drifted higher but but not by much. Volatility made a strong move lower, printing a new 9 month low before a slight bounce to end the week. The Equity Index ETF’s reacted with the SPY and IWM making new all-time highs and the QQQ new 13 year highs, but the latter two pulling back to end the week. What does this mean for the coming week? Lets look at some charts.
The SPY started the week higher, breaking the 6 week long channel, and then continued up creating a series of new all-time highs. This also created the next set up of upside targets at 185, on a Measured Move, and 186 on the channel measure higher. The RSI is strong and bullish on the daily chart, near 70, with the MACD continuing higher after it crossed up on Monday. These support more upside. The small rising candles on slowing volume are sure to scare many people off as they would be sings of a rising pennant, generally a reversal pattern. But with the holiday week it is hard to give as much weight the volume confirmation. The weekly chart shows some strength. The RSI is moving back higher and touching into technically overbought territory, but barely, while the MACD is avoiding a cross down and moving back higher. The Measured Move higher from this timeframe takes it to 193. There is no resistance higher and support shows up at 183 and 180.40 followed by 178.50. Upward Bias.
As the year closes the markets look ready for a rest after a strong showing all year. Look for Gold to consolidate or continue in the trend lower while Crude Oil continues to the upside. The US Dollar Index looks to continue in the consolidation with an upward bias while US Treasuries may be ready for the big one to the downside. The Shanghai Composite and Emerging Markets remain biased to the downside with consolidation a possibility for the Chinese market. Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the VIX being biased higher. The individual charts of the equity indexes show the SPY looking strongest with the IWM and QQQ starting what could be pullbacks and over extended. 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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