SPY Trends and Influencers March 17, 2012

• Posted by Greg Harmon
• on March 17th, 2012

Last week’s review of the macro market indicators saw heading into the new week Gold ($GLD) would continue to confuse on a short term basis looking higher in the downtrend in a long term uptrend while Crude Oil ($USO) consolidated in a higher range with an upside bias. The US Dollar Index ($UUP) seemed ready to continue higher while Treasuries ($TLT) continued to consolidate with a bias to the downside. Both the Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were consolidating and might continue with a bias to the upside. The Volatility Index ($VIX) looked to have bottomed but also showed no signs of rising soon. These influencers painted a scene for the Equity Index ETF’s $SPY, $IWM and $QQQ to move higher, and after the small pullback the prior week all of their charts agreed and were biased higher with the SPY and QQQ looking a bit stronger than the IWM.

The week began with Gold taking another leg lower while Crude Oil also drifted lower, but held its range. The US Dollar did move higher but gave it all back by Friday while Treasuries finally cracked. The Shanghai Composite started higher but news sold it off mid week and Emerging Markets moved to the upper end of their recent range. The Volatility fell fell again, showing the bottom was not in. The Equity Index ETF’s made renewed moves higher on the VIX move lower ending the week consolidating higher. 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 broke resistance higher leaving a gap at 137.16-137.49 in its wake and finishing near the high for the week. The daily chart shows the Bollinger bands expanding to allow for more upside and the RSI holding bullish just over 70. The MACD has turned positive and is growing, supporting more upside. All of the SMA’s are rising. A strong bullish chart on the daily timeframe. The weekly chart shows a break above the Fan line that has played a role the last 6 weeks and a long white candle higher. The RSI on this timeframe continues to trend higher and is just reaching the 70 level while the MACD remains positive. The dark blue Fibonacci levels represent the move from the 2007 high to the low in 2009. Resistance higher is found at 143.02, a 100% retracement and then a target of 161.97, the 123.6% Fibonacci extension comes into play. Support on any pullback is found at 139.80-140.00 followed by the previously mentioned gap and 134.30. All bullish. Continued Uptrend.

Heading into next week the market provided some clarity. Gold looks to continue lower while Crude Oil consolidates with an upward bias. The US Dollar Index looks better to the upside but Treasuries now are solidly biased lower. The Shanghai Composite look lower while Emerging Markets are poised to break higher out of a consolidation zone. The Volatility Index added some spice to the part and does not look to move markedly higher some. These influencers build a backdrop for the US Equity Index ETF’s SPY, IWM and QQQ to continue higher. An acceleration of Treasuries lower will only reinforce this. The charts of those Index ETF’s agree with the SPY and QQQ looking the strongest and the IWM still working off some previous price history. Use this information as you prepare for the coming week and trade’m well.

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