SPY Trends and Influencers January 25, 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, heading into the new week, the equity markets look mixed but biased higher. It looked for Gold ($GLD) to continue higher short term in its downtrend while Crude Oil ($USO) rose in the consolidation zone lower. The US Dollar Index ($UUP) seemed ready to move higher while US Treasuries ($TLT) were also biased higher in consolidation. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) remained biased to the downside. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts were mixed with the SPY the weakest and looking like consolidation at best in the short run, with the QQQ next and the IWM the strongest looking higher.

The week played out with Gold pushing higher towards the end of the week while Crude Oil continued the move higher. The US Dollar drifted slightly higher until a steep drop at the end of the week while Treasuries continued the move higher to long term resistance. The Shanghai Composite may have found a bottom as it bounced higher while Emerging Markets continued to get beaten down. Volatility made a move back higher, ending the week over all of its moving averages. The Equity Index ETF’s started the week higher with the IWM and QQQ making new highs before all took a dive to close out the week. 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 d
SPY Weekly, $SPY
spy w

The SPY started the week by continuing the consolidation over 181.80 from last week but that started to change by Thursday. The Hammer Thursday held at support but then Friday drove a big bearish Marubozu candle lower on strong volume. The move took it well below the 50 day SMA and outside of the Bollinger bands on the daily chart. The RSI is now into bearish territory and at levels not seen since August. But also right at those August and October lows. Looking out at the weekly chart shows a Marubozu as well and it is approaching the rising trend support line. The RSI is falling but remains in bullish territory. In fact a reversal here or before 177.32 the low of the week of December 16th, would trigger a RSI Positive Reversal, with a target move higher of 7.62 points. The MACD points lower though and the combination favors the downside continuing. The longer rising trend line support is below and there is prior support at 178.50 and 177.60 followed by 175. Recall from A Longer Perspective that below 175 the bullish trend becomes suspect. Resistance is now at 180.40 and 181.80 followed by 183. Continued Downside.

Closing out January the equity markets are looking like they need to pullback or at best consolidate. Specifically look for Gold and Crude Oil to continue higher. The US Dollar Index seems content to move sideways while US Treasuries are biased to the upside. The Shanghai Composite looks to be reversing higher and Emerging Markets are biased to continue the downside. Volatility looks to remain subdued but moving toward important levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but with less strength. Their charts show that the SPY is the weakest and looks better to continue lower while the IWM and QQQ look a bit stronger in the longer timeframe but could also continue to pullback. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview January 24, 2014


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