SPY Trends and Influencers October 5, 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 3rd Quarter came to a close that the markets looked positive but softer on a short term basis. The next week looked for Gold ($GLD) to consolidate or move higher while Crude Oil ($USO) continued lower. The US Dollar Index ($UUP) looked to continue its downward action while US Treasuries ($TLT) were biased higher near resistance. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were moving together and continued to look best to the downside. Volatility ($VIX) looked to remain subdued but with a drift higher keeping the bias neutral to higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY looked the weakest of the bunch and better lower while the IWM and QQQ consolidated in their uptrends.

The week played out with Gold dipping lower while Crude Oil started lower before finding support late in the week. The US Dollar Index continued to fall while Treasuries consolidated in a slow drift lower. The Shanghai Composite was open one day and moved up slightly while Emerging Markets found a bottom and had a slight bounce. Volatility picked up a bit and will be on the radar, but remained subdued. The Equity Index ETF’s mostly consolidated with the SPY finding support and the IWM and QQQ holding near the highs. 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 broke lower to start the week, touching the 61.8% retracement of the bearish Shark pattern. After a small bounce it moved in a tight range the rest of the week between the 167 bottom and the 169.50 top. This is also between 38.2% and 61.8% of the last leg higher, two key Fibonacci levels. The daily chart shows a Relative Strength Index (RSI) that has held at the mid line through the pullback but a Moving Average Convergence Divergence indicator (MACD) that continues lower, although settling on the histogram. Perhaps a turn coming. The weekly chart shows the touch of the 20 week SMA, the middle of the Bollinger bands, and despite moving lower a Hollow Red candle, showing bullish intra-week price action. Should it hold up it would signal yet another higher low, in the series of higher highs and higher lows. On the longer term the rising trend support from the November low still has not been breached. The RSI on this timeframe remains in bullish territory with a MACD that is leveling. There is resistance higher between 168.85 and 169.35 and then at 171 and 173.60. Support lower is found at 167.70 and 166 followed by 164.50 and 163. To remain in the uptrend the 163.05 level must hold. Possible Reversal Out of Pullback in the Uptrend.

As the 4th Quarter and earnings season begins there is no additional clarity in the equity markets. Look for Gold to continue lower while Crude Oil rises in the short pullback. The US Dollar Index looks to continue lower while US Treasuries consolidate with a downward short term bias. The Shanghai Composite is poised to move lower and Emerging Markets are biased to the upside now. Volatility looks to remain low but drift higher although still in an area that is beneficial for the equity index ETF’s SPY, IWM and QQQ. There charts show that the QQQ and IWM remain strong and consolidating in bull flags or channels, while the pullback in the SPY may be over. 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 October 4, 2013


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