SPY Trends and Influencers February 1, 2014
- Posted by Greg Harmon
- on February 1st, 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, closing out January the equity markets were looking like they needed to pullback or at best consolidate. Specifically it looked for Gold ($GLD) and Crude Oil ($USO) to continue higher. The US Dollar Index ($UUP) seemed content to move sideways while US Treasuries ($TLT) were biased to the upside. The Shanghai Composite ($SSEC) looked to be reversing higher and Emerging Markets ($EEM) were biased to continue to the downside. Volatility ($VIX) looked to remain subdued but moving higher toward important levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ, but with less strength. Their charts showed that the SPY was the weakest and looked better to continue lower while the IWM and QQQ looked a bit stronger in the longer timeframe but could also continue to pullback.
The week played out with Gold probing higher and failing immediately while Crude Oil did the opposite, falling and then making new highs. The US Dollar did drifted sideways until it popped to end the week at last weeks highs while Treasuries bobbed and jerked higher. The Shanghai Composite consolidated its move from last week and Emerging Markets put in new lows. Volatility continued to hold at last weeks levels, above the recent range but still muted. The Equity Index ETF’s consolidated their moves lower from last week, making slightly lower lows in the process. What does this mean for the coming week? Lets look at some charts.
The SPY continued lower Monday but quickly found support and consolidated the rest of the week. Is this the basis for a reversal? Or is it a bear flag? We will see soon I think. The action touched the 100 day SMA twice this week and bounced finishing over the prior support/resistance line. The RSI on the daily chart is holding in bearish territory with a MACD that continues lower both supporting more downside. On the weekly chart the price drop this week negated the possibility of a short term Positive RSI Reversal by making a new lower low. The price did hold at the rising trendline as that intersects with the 20 week SMA. The RSI remains in bullish territory on this timeframe but is falling with a MACD that has crossed down. There is support lower at 177 and 175 followed by 173.60 and 171. Resistance higher comes at 179.50 and 180.40 followed by 181.80. Continued Downward Price Action.
Heading into February the equity markets are all moving together and look better lower. Look for Gold to consolidate and possibly reverse lower while Crude Oil continues its rise. The US Dollar Index looks better to the upside while US Treasuries are remain biased higher with significant resistance nearby. The Shanghai Composite looks to be consolidating and may be ready to move higher while Emerging Markets are also consolidating but with a downside bias. Volatility looks to remain low but creeping up to important levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but with very little strength. Their charts show that the SPY is the weakest and looks to continue lower while the IWM is next and then the QQQ the strongest, but only looking at best to consolidate and likely to pullback too. 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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