SPY Trends and Influencers August 9, 2014
- Posted by Greg Harmon
- on August 9th, 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 dog days of August, that the equity markets were mixed but with some weakness. Elsewhere looked for Gold ($GLD) to continue lower in its band around 1300 while Crude Oil ($USO) headed lower, unless the Hammer confirmed Monday. The US Dollar Index ($UUP) looked to continue to the upside but could consolidate first while US Treasuries ($TLT) were biased higher. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were both biased to the upside with the risk of Emerging Markets consolidating or pulling back first. Volatility ($VIX) looked 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 continued to be mixed with the IWM still the weakest and falling, while the SPY also looked better to the downside in the short run, and the QQQ the strongest but still with a possibility of more downside.
The week started out with Gold pushing lower before finding support and rebounding mid week to end the week up while Crude Oil held in a tight range. The US Dollar consolidated at resistance along with Treasuries. The Shanghai Composite made new highs before pulling back but held support while Emerging Markets pulled back from long term resistance. Volatility pushed higher again before settling lower on the week. The Equity Index ETF’s started the week well but ended up really just consolidating last week’s move, with the IWM the exception reversing higher. What does this mean for the coming week? Lets look at some charts.
The SPY started the week confirming the Spinning Top that ended the prior week higher, a reversal. That quickly failed though it moved down to the 100 day SMA where it consolidated the rest of the week. Friday’s strong bullish candle gives the view of a renewed move higher, but then we ended last week that way as well. The daily chart shows that the RSI is making a new higher high though and the MACD has leveled with the histogram moving back toward zero. These can support a reversal so things are a bit brighter than the ‘hope’ last week. Should this confirm higher with follow through next week there is a Measured Move to 208 above. The weekly chart printed a doji candle at the rising trend support line that has held since October 2011. The MACD continues to move lower but the RSI is leveling, at a higher low. There is support lower at 193 and 190.50 followed by 189.10. Resistance higher comes at 194 and 195 before 196.50 and 198.30 followed by the top at 199.06. Consolidation in the Uptrend.
Heading into next week the equity markets still look a bit shaky, but better than last week. Elsewhere look for Gold to continue to consolidate with an upward bias while Crude Oil consolidates with a downward bias. The US Dollar Index and US Treasuries look set to consolidate with an upward bias. The Shanghai Composite is also consolidating with an upward bias, while Emerging Markets are biased to the downside as they struggle at resistance. Volatility looks to remain low but with an upward bias keeping the bias flat to slightly lower for the equity index ETF’s SPY, IWM and QQQ. Their charts show that the IWM is strongest again and showing the strongest signs of a reversal while the SPY and QQQ look as if they could continue to consolidate in their long term uptrends. 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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