SPY Trends and Influencers September 8, 2012
- Posted by Greg Harmon
- on September 8th, 2012
Last week’s review of the macro market indicators saw as September began, Gold ($GLD) and Crude Oil ($USO) looking to move higher with a chance that Crude consolidates. The US Dollar Index ($UUP) looked to continue lower while US Treasuries ($TLT) were moving up. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked to continue their downside moves with the chance that Emerging Markets find support nearby. Volatility ($VIX) looked to remain subdued but drifting higher keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The SPY looked the most vulnerable of the three for a pullback and all three could easily continue sideways. There was also a caution to watch Treasuries, as their break higher would typically signal a pullback in Equities.
The week played out with Gold ripping higher while Crude Oil took the consolidation option. The US Dollar did continue lower while Treasuries started higher only to give it all back and then some. The Shanghai Composite consolidated at multi-year lows before bouncing Friday while Emerging Markets found that bottom at support and rose. Volatility popped up early but quickly fell through the rest of the week. The Equity Index ETF’s started steady but then jumped after the Draghi news and held after the Non-Farm Payrolls report, with the SPY and QQQ ending near new multi-year highs and the IWM closing in. 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 its consolidation higher finishing the week with a new 4 year high. And it looks good for more. The Relative Strength Index (RSI) on the daily chart is bullish and rising with a Moving Average Convergence Divergence indicator (MACD) that is about to cross to positive, both supporting further upside. Yes, the RSI at 70 is technically overbought, but barely and with the sharp slope higher don’t count on a pullback or consolidation yet. The weekly chart shows the move higher creating some separation from the rising trend support line off of the 2009 lows. The RSI on this timeframe is bullish and rising with a MACD that is positive and growing. More positive news. The target on a Measured Move higher takes it to 147.70 followed by 153.60 on the longer term scale. A pullback has support at 143 and 140 followed by 137.90. Continued Uptrend.
With the full workforce returning from vacation the markets are looking very bullish. Gold looks to continue its uptrend while Crude Oil may consolidate with in the current uptrend. The US Dollar Index is wounded and heading lower and US Treasuries look to follow it lower as well. The Shanghai Composite is ready for a continued bounce in the downtrend and Emerging Markets are looking higher in the broad range. Volatility looks to remain very low making for an environment for the equity index ETF’s SPY, IWM and QQQ, to continue higher. And all three charts on both the daily and weekly timeframes are set up to comply. Use this information as you prepare for the coming week and trade’m well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)