SPY Trends and Influencers January 11, 2014
- Posted by Greg Harmon
- on January 11th, 2014
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 first full week of 2014 began, that the markets were showing signs of rotation again. It looked for Gold ($GLD) to continue to bounce in its downtrend while Crude Oil ($USO) continued lower. The US Dollar Index ($UUP) looked content to move sideways with an upward bias while US Treasuries ($TLT) consolidated with a bias lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to the downside with the possibility that the Chinese market continued to consolidate. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed that the SPY and IWM were consolidating their gains with slight pullbacks and looked solid, with the slight edge to the IWM, while the QQQ was pulling back and might do so a bit longer still.
The week played out with Gold probing higher and failing before making a higher low while Crude Oil continued the drift lower. The US Dollar drifted slightly higher while Treasuries made a move higher to test the recent range. The Shanghai Composite and Emerging Markets continued lower but Emerging Markets may have found a bottom. Volatility made a move back lower, continuing last weeks fall. The Equity Index ETF’s halted their fall and bounced, but non made a new high. What does this mean for the coming week? Lets look at some charts.
The SPY got everyone all worked up Monday, with a bearish engulfing candle continuing last weeks down move. But it found support at the prior break out level and reversed higher, in a slow drift, ending the week just shy of the all time high. The Hanging Man like candles will get many concerned of a possible reversal. But the RSI is rising again on the daily chart and the MACD has leveled, ending its drop. The weekly chart shows consolidation at the highs continuing. The RSI on this timeframe is holding strong and bullish while the MACD is leveling at a high value. There is support lower at 183 and 181.80 followed by 180.40 and 177.80. Above the only remaining resistance at 184.69 there are targets on a Measured Move to 185 and 186 followed by 193. Uptrend Resumes, Cautiously.
Heading into the first Options Expiration of the year the equity markets have survived a scare but look mixed. Next week look for Gold and Crude Oil to bounce in their downtrends. The US Dollar Index is now biased lower while US Treasuries are biased higher in the short run. The Shanghai Composite and Emerging Markets are biased to the downside with risk of the Emerging Markets bouncing higher. Volatility looks to remain subdued and biased lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are decidedly mixed though with the IWM looking strongest and better to the upside, while the SPY looks a bit more fragile but still better higher and the QQQ the worst and looking sideways. 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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