SPY Trends and Influencers August 2, 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 last days of July, that the Equity Indexes again were mixed. Elsewhere looked for Gold ($GLD) to continue lower in its consolidation while Crude Oil ($USO) slowly climbed in its broad consolidation. The US Dollar Index ($UUP) was breaking higher and looked to continue in the short run while US Treasuries ($TLT) continued to look good to the upside. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were also biased to the upside with the risk that Emerging Markets could find resistance. Volatility ($VIX) looked to remain at low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts painted a mixed picture though with the QQQ looking strong and ready to continue higher while the SPY consolidated in the uptrend and the IWM pulled back in the consolidation range.

The week played out with Gold moving under 1300 again before rebounding at the end the week, but lower while Crude Oil crapped out falling hard. The US Dollar moved higher before falling back to support Friday, while Treasuries made a new 52 week high before pulling back to end the week lower. The Shanghai Composite continued higher and then held over support to end the week while Emerging Markets met resistance at the top of a 3 year channel and pulled back. Volatility jumped back over the moving averages ending near a 3 month high but still in the teens. The Equity Index ETF’s did start mixed with the IWM heading lower but the SPY and QQQ holding stable. But eventually the SPY and then the QQQ joined the IWM lower on 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 with a Hammer at the 20 day SMA, raising hope of non-event pullback only to be followed by a bearish engulfing candle that confirmed lower and lead to a bigger move down. The total move was only a little over 2.5% though so it is still minor. Friday’s Doji Spinning Top outside of the Bollinger bands on strong volume will take us into next week with the possibility of a reversal higher as well. It will still be a stress filled weekend for the bulls though as the RSI and MACD are both in support of a continued move lower. The weekly chart shows a strong candle lower finishing near the lows, but on rising trend support. The RSI is pulling back on this timeframe but in the bullish range with the MACD crossed down. Both support more downside. There is support lower at 191 and 190.40 followed by 188.60 and 181.25. Resistance higher now stands at 193 and 194 followed by 195.40 and 196.50, before another assault at the top. Pullback in the Uptrend, Watching the Doji.

Heading into the dog days of August the equity markets are mixed but with some weakness. Elsewhere look for Gold to continue lower in its band around 1300 while Crude Oil heads lower, unless the Hammer confirms Monday. The US Dollar Index looks to continue to the upside but may consolidate first while US Treasuries are biased higher. The Shanghai Composite and Emerging Markets are both biased to the upside with the risk of Emerging Markets consolidating or pulling back first. Volatility looks to remain in the low range but biased to the upside keeping the bias neutral to higher for the equity index ETF’s SPY, IWM and QQQ. The indexes themselves continue to be mixed with the IWM still the weakest and falling, while the SPY also looks better to the downside in the short run, and the QQQ the strongest but still with a possibility of more downside. Use this information as you prepare for the coming week and trad’em well.

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