SPY Trends and Influencers January, 22, 2012

Last week’s review of the macro market indicators looked heading into another holiday shortened week that the markets would continue to improve. Gold ($GLD) looked likely to head a bit lower while Crude Oil ($USO) consolidated in the short term within the broad 95-102.5 range. Both the US Dollar Index ($UUP) and Treasuries ($TLT) were biased to the upside although Treasuries may continue in their consolidation range. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked better to the downside with a chance that Emerging Markets consolidate sideways. Volatility ($VIX) looked to continue lower but likely at a slower pace. These inputs set up a scenario where the US Equity Index ETF’s $SPY, $IWM and $QQQ could continue higher. The charts for the SPY and IWM agreed looking ready for more. The QQQ was up against resistance so it might take some time to get through but was also biased higher.

The week began with Gold drifting higher while Crude Oil did stay in the broad range. The US Dollar Index failed to hold and moved lower with US Treasuries topping and falling as well. The Shanghai Composite reversed, completing a Rising Three Methods, and continued higher along with Emerging markets. Volatility did move lower with the VIX ending the week under 20 for the first time since July. The moves in these influencers continued to support a upward bias for the US Equity Index ETF’s SPY, IWM and QQQ and they all continued higher, the QQQ to levels not seen since 2001. 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

The SPY continued the trend higher on the week finishing just under resistance at 131.77. Thursday and Friday created the start of a consolidation which could halt things in the near term. The RSI and MACD on the daily chart continue to point to more upside though, slowly trending higher and bullish and the Bollinger bands are confirming with an expansion to the upside. On the weekly chart there is also a positive tone. This week’s candle increased in size which adds to the bullish picture, with the RSI is trending up and near a bullish move over 60 and the MACD continues to increase. Price is up against the Fibonacci Arc which may prove to be a catalyst for a move. Resistance higher is found at 133.13 and 134.95 before a major break to the upside and resistance at 143.50 at the 2007 high. Support on a pullback comes at 128.60 followed by 125 and 121.

Heading into the last full week of January Gold looks to consolidate or move higher within the intermediate downtrend, limited by 1700, while Crude Oil continues to consolidate within the 92.50 to 102.5 channel. Both the US Dollar Index and Treasuries are on watch for a breakdown lower. The Dollar out of a rising channel and Treasuries an ascending triangle. The Shanghai Composite looks to continue higher within the downtrend while Emerging Markets move up within the broad channel with 42.54 at the top. Volatility looks to consolidate or bounce within the downtrend after a strong move lower. These influencers combine to support more upside for the Equity Index ETF’s, and the charts for the SPY, IWM and QQQ agree and look higher. Use this information as you prepare for the coming week and trade’m well.

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