SPY Trends and Influencers July 3, 2014

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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, with Monday closing the 2nd Quarter and heading into July, the equity market still looked strong. Elsewhere looked for Gold ($GLD) to continue in its uptrend while Crude Oil ($USO) might consolidate in its uptrend. The US Dollar Index ($UUP) was in another short term downtrend while US Treasuries ($TLT) were biased higher, but could see a very short pullback first. The Shanghai Composite ($SSEC) continued to grind sideways with Emerging Markets ($EEM) pulling back or consolidating in their uptrend. Volatility ($VIX) looked to remain minuscule keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed that the SPY and IWM gained some strength to end the week but were still in a range while the QQQ was rising and very strong.

The short week played out with Gold probing higher before consolidating while Crude Oil started to leak lower. The US Dollar found a bottom and started a bounce while Treasuries fell from resistance. The Shanghai Composite moved in a tight range slightly higher while Emerging Markets broke higher. Volatility closed at a new 7 year low and nearly at the low of the week. Against this positive backdrop the Equity Index ETF’s moved to new higher highs, with the SPY closing at new all-time highs, the IWM with its first close over 120 before a small pullback and the QQQ at new 14 year 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 Weekly, $SPY
spy w

The SPY started the week with a doji star raising the prospect of a reversal in many minds. But a doji signals indecision, not a reversal, and can resolve higher, as this did, ending the week at a new all-time high. It left a small gap up Thursday but remains bullish on the daily timeframe with a rising RSI and a MACD that just crossed up as it rises. It did close out of the Bollinger bands, so a sideways move or one lower to close that gap would not be unexpected. On the weekly chart the trend higher since April looks strong. It is not very extended from the rising trend or the 20 week SMA. The RSI is bullish and rising, technically overbought but barley over 70, with a MACD that is rising and bullish. The Measured Move at 197.30 held it for 2 days but is now in the rear view mirror and targets higher remain in the short term at 200, the round number, and Measured Moves to 202.50 and 203. Support lower may come at 197.30 and 196.50 followed by 194 and 190.40. Continued Upward Price Action.

As July gets in full swing the equity markets look very strong. Elsewhere look for Gold to continue in its uptrend while Crude Oil continues lower in a pullback in the uptrend. The US Dollar Index looks to move sideways while US Treasuries consolidate but are biased lower. The Shanghai Composite and Emerging Markets are biased to the upside. Volatility looks to remain unusually low and actually biased lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show strength but with the QQQ possibly getting extended and the IWM near prior resistance. Use this information as you prepare for the coming week and trad’em well.

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