SPY Trends and Influencers October 19, 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, moving into the October Options Expiration week, to look for Gold ($GLD) and Crude Oil ($USO) to continue to move lower. The US Dollar Index ($UUP) looked to continue higher in the down trend while US Treasuries ($TLT) consolidated but were biased lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were both biased to the upside in the short term. Volatility ($VIX) looked to remain low and falling again keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts also looked higher with the IWM and QQQ near their highs but the SPY needing a little more to get there.

The week played out with Gold finding support before a bounce higher while Crude Oil continued the drift lower. The US Dollar made a lower low to end the week lower while Treasuries made a higher high. The Shanghai Composite and Emerging Markets continued higher but with the Chinese market topping and ending the week on a down note. Volatility made a strong move lower, continuing last weeks fall. The Equity Index ETF’s reacted with the SPY and IWM making new all-time highs and the QQQ new 13 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 d
SPY Weekly, $SPY
spy w

The SPY started the week by completing a Three Advancing White Soldiers pattern followed by a Harami, an indecision candle and often bringing a reversal, only to continue higher ending the week at new all-time highs. The 3 white candles to end the week are not as bullish as the ones that started it as it ended with an Evening Star, another potential reversal candle. The RSI continues to support the bullish case with a move higher in bullish territory over 60 and the MACD continues to rise, also supporting more upside price action. On the weekly chart the Marubozu continues the bounce off of the trend support and bodes for more upside action to come as well and a possible 3 Advance White Soldiers on this time frame. The RSI is rising and bullish and the MACD about to cross up on this timeframe, supporting the bull case. There is support at 173.60 and 170.90 followed by the area from 168.85-169.35. There is no resistance higher but the Measured Move takes it to 175.08. Continued Upward Price Action, Minding the Evening Star.

Heading into the next week, the markets are behaving strongly but showed the first sign of being extended Friday. Look for Gold to continue to bounce in the downtrend while Crude Oil continues lower. The US Dollar Index is set up to continue lower while US Treasuries are poised to show if they really want to reverse higher at resistance. The Shanghai Composite looks to continue lower in the uptrend while Emerging Markets move higher. Volatility looks to remain low and possibly continue lower keeping the wind at the backs of the US Equity markets. The SPY, IWM and QQQ are all looking very strong on the intermediate timeframe but with Evening Stars to end the week may need to close the gaps lower before continuing to advance. Use this information as you prepare for the coming week and trad’em well.

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