SPY Trends and Influencers March 11, 2012

• Posted by Greg Harmon
• on March 11th, 2012

Last week’s review of the macro market indicators saw heading into the first full week of March that the market still looked strong but was showing signs of a needed rest in some areas. Gold ($GLD), the enigma, looked lower in the very short term but positive on an intermediate and long term basis while Crude Oil ($USO) was consolidating in an uptrend. US Treasuries ($TLT) remained in their consolidation zone but were looking slightly better to the upside while the US Dollar Index ($UUP) appeared to have found a bottom and was ready to work higher as well. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) both continued to look higher into the week. Volatility ($VIX) looked biased to the downside but with little room lower, while it certainly did not look ready to turn higher. These influencers set the stage for the US Equity Indexes to consolidate within their uptrend. A move lower by the US Dollar Index or Treasuries could change that to continue the rally higher. The charts of Equity Indexes were mixed though. The $QQQ remained very strong while the $SPY was ready to consolidate and the $IWM looked ready to pullback. A hard move higher by the QQQ or lower by the IWM, dragging the SPY with either could set the direction for the next few weeks.

The week began with Gold falling and finding support for a bounce while Crude Oil consolidated in the higher range. The US Dollar Index did move higher while Treasuries remained in their tightening range at the bottom of a channel. The Shanghai Composite consolidated its move higher as Emerging Markets fell early in the week only to recover by Friday. Volatility fell slightly as it begins to bottom. The Equity Index ETF’s SPY, IWM and QQQ all fell lower through the first half of the week before moving back higher by Friday, with the QQQ printing a new 11 year closing high. 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 tripped off of the curb to start the week but recovered to end where it left off the previous week. The trip left it with a healthier RSI in the low 60’s and rising and a MACD that is improving toward the zero line on the daily chart. Like the flawless point guard tripping over his own feet gives the defense renewed faith in being able defend him and takes a step back, before he pulls up and drains a three to surge again. Both supporting more upside. The weekly chart continues to rise along the Fan line with a RSI that is trending higher and a MACD that is positive. There is resistance higher at 139.80 and 143 and support lower on a pullback at 134 and 130. The SPY is back on track. Continued Upside.

Heading into the new week Gold continues to confuse on a short term basis looking higher in a downtrend in a long term uptrend while Crude Oil consolidates in a higher range with an upside bias. The US Dollar Index seems ready to continue higher while Treasuries continue to consolidate with a bias to the downside. Both the Shanghai Composite and Emerging Markets are consolidating and may continue with a bias to the upside. The Volatility Index looks to have bottomed but also shows no signs of rising soon. These influencers paint a scene for the Equity Index ETF’s SPY, IWM and QQQ to move higher, and after the small pullback last week all of their charts agree and are biased higher with the SPY and QQQ looking a bit stronger than the IWM. Use this information as you prepare for the coming week and trade’m well.

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