SPY Trends and Influencers October 25, 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 week, that equity markets looked like they may have dodged a bullet, but still needed to confirm that with a move higher. Elsewhere looked for Gold ($GLD) to consolidate with an upward bias while Crude Oil ($USO) remained biased lower, but was showing a possible bottom. The US Dollar Index ($UUP) looked to consolidate or resume the uptrend while US Treasuries ($TLT) were showing signs of a possible reversal lower. The Shanghai Composite ($SSEC) looked ready to resume the uptrend while Emerging Markets ($EEM) were showing signs of a possible reversal higher. Volatility ($VXX) looked to remain elevated and biased to stay there despite the spike and pullback, keeping the bias lower for the equity index ETF’s $SPY, $IWM and $QQQ. There charts showed signs of reversal higher with the IWM leading, but all needed to prove they wanted to reverse with a move higher this week, otherwise the risk was to the downside.

The equity indexes took the message and delivered a strong week with the SPY and QQQ delivering strong bullish Marubozu candles and the IWM moving higher higher as well. Gold tested higher and pulled back while Crude Oil spent the week bouncing off of support. The US Dollar moved slightly higher out of consolidation while Treasuries continued their pull back. The Shanghai Composite confirmed the reversal higher and immediately failed moving back lower while Emerging Markets continued to consolidate. Volatility reversed lower , back to the range of the last 2 years, clearing the way for further equity gains. 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 under the 200 day SMA and with lots of room to the 5-0 harmonic PRZ above. Monday’s strong move higher confirmed the Friday doji to the upside and then the gap up follow through on Tuesday reinforced it. The bears attempted to take charge then pulling the SPY back under the 20 and 150 day SMA’s but could not follow through Thursday and then it gapped up and closed higher Friday. The push brought it very close to the 50 day SMA and prior resistance. The daily chart now shows a RSI that has crossed the mid line and is approaching the bullish zone with a MACD that continues higher after crossing up Tuesday. A very strong rebound. The weekly chart shows a long bullish Marubozu candle confirming the Hammer as a reversal from last week as it touched the 50 week SMA. Some will still be concerned about the downside but most will now be cautiously optimistic at least. There is resistance higher at 198.30 and 199 before 200 and the prior high at 201.90. Over that terms the intermediate trend higher as well. Support lower comes at 194 and 191.30, followed by 190.50 and 188.20. Short Term Upside Continues in Long Term Uptrend.

Heading into the last week of October the equity markets look to have nearly fully recovered from the Droptoberfestâ„¢ selloff. Elsewhere look for Gold to resume its downtrend while Crude Oil consolidates with a bias to turns lower. The US Dollar Index remains strong but digesting its recent gains while US Treasuries are biased lower. The Shanghai Composite seems to be in short term pullback mode while Emerging Markets consolidate in the downturn with signs of a possible reversal higher. Volatility looks to to have settled back into the lower range putting the wind at the back of the equity index ETF’s SPY, IWM and QQQ. Their charts showed great strength last week and no reason for it to stop next week. 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 24, 2014

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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