SPY Trends and Influencers September 15, 2012

Last week’s review of the macro market indicators saw, with the full workforce returning from vacation, the markets were looking very bullish. Gold ($GLD) looked to continue its uptrend while Crude Oil ($USO) might consolidate with in the current uptrend. The US Dollar Index ($UUP) was wounded and heading lower and US Treasuries ($TLT) looked to follow it lower as well. The Shanghai Composite ($SSEC) was ready for a continued bounce in the downtrend and Emerging Markets ($EEM) were looking higher in the broad range. Volatility looked 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 were set up to comply.

The week played out with Gold consolidating before ripping higher following the Fed announcement while Crude Oil drifted up before it popped as well. The US Dollar continued lower while Treasuries lost support and joined them. The Shanghai Composite continued to consolidate its gains while Emerging Markets are off to the races. Volatility tried to move higher but gave it up making a new lower low at the end of the week. The Equity Index ETF’s played a waiting game for the Fed and then launched higher as well making new multi-year closing highs. 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 the consolidation higher out of the Federal Reserve Announcement continuing slightly higher on Friday. The Relative Strength Index (RSI) is now technically overbought on the daily timeframe and could lead to a consolidation or pullback with a Moving Average Convergence Divergence indicator (MACD) that remains pointing to further upside. The upper shadow on Friday’s candle came very close to the Measured Move of this leg higher at 149.07. Above that the Cup and Handle target is 156.74 from the cup May through mid August. The weekly chart shows expanding Bollinger bands, allowing for further upside, with a RSI that is bullish, rising and overbought, but not extreme and a MACD that is positive and rising. Should it pullback look for support at 144.44 and 140. Continued Uptrend with a Chance of a Short Term Consolidation.

Heading into next week the markets look strong but perhaps a bit extended. Gold and Crude Oil look ready to continue their moves higher with a possibility that Gold consolidates first. The US Dollar Index and US Treasuries are poised to continue lower, with treasuries having the best chance for a bounce. The Shanghai Composite seems bound by the 50 day Simple Moving Average (SMA) while Emerging Markets are biased to the upside but at major resistance. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. With the moves higher, each could be forgiven if they consolidated or had a slight pullback first and their charts do have some signs of being extended on the short run. Use this information as you prepare for the coming week and trade’m well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview September 14, 2012

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