SPY Trends and Influencers September 17, 2016

• Posted by Greg Harmon
• on September 17th, 2016

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators noted that heading into September Options Expiration the Equity Indexes were retrenching. Elsewhere looked for Gold ($GLD) to move lower in its short consolidation over 1310 while Crude Oil ($USO) consolidated sideways. The US Dollar Index ($DXY) looked to move higher in the broad consolidation while US Treasuries ($TLT) were biased lower. The Shanghai Composite ($ASHR) looked to continue to trend slowly higher while Emerging Markets ($EEM) were biased to the downside in the short term.

Volatility ($VXX) looked to remain at the top of the normal range adding to the bias lower for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts all looked better to the downside in the short run, but with the SPY and QQQ well outside of their Bollinger Bands, so perhaps ready for a bounce first. The IWM was sitting on its lower Bollinger Band, a good place to bounce if it wanted to.

The week played out with Gold drifting lower while Crude Oil turned down and dropped all week. The US Dollar moved slightly higher until a bigger move Friday while Treasuries continued lower. The Shanghai Composite moved lower to 3000 in a shortened week while Emerging Markets moved lower, finding support at the major long term level.

Volatility started the week reversing higher but then gave most of that back and settled the rest of the week. The Equity Index ETF’s started the week reversing higher in a sharp move, but could not hold the gains and retreated Tuesday. They settled in a smaller range from there to end the week lower. The QQQ had a different week though, trending higher all week and ending near all-time highs. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into Monday with a market in a dire mood following the steep drop Friday. With every chart looking like a short the market did the complete opposite. The SPY opened at a lower low Monday but proceeded to rise all day, closing nearly at the point of the gap down from Friday and up over 2% on the day. Sentiment flipped quickly. But Tuesday failed to follow through, resulting in no confirmation of the Piercing Line Tuesday as a reversal.

Instead the SPY printed an inside candle Tuesday and Wednesday. Thursday then saw a push higher again bringing a boost to sentiment. But a doji Friday near the bottom of the Thursday candle squelched the enthusiasm. The entire week respected the 100 day SMA as support. The RSI on the daily chart is also holding, at the edge of the flip from bullish to bearish territory, while the MACD continues lower. The MACD is now very close to the Brexit low.

The weekly chart shows an Inverted Hammer showing the attempt higher thwarted, but a positive week. The RSI on this timeframe went flat above the mid line, bullish, and the MACD has crossed down. There is support lower at 212.50 and 211 followed by 210.20 and 208. Resistance above comes at 214 and 215 followed by 215.70 and 217 before 218 and 219. Consolidation with a Short Term Downward Bias.

SPY Weekly, $SPY

As the books close on September Options Expiration the markets are again teetering between bullish and bearish. Elsewhere look for Gold to test support here and if it fails see a move lower while Crude Oil continues down. The US Dollar Index has short term strength and should continue higher while US Treasuries consolidate in their pullback. The Shanghai Composite is biased to the downside at support and Emerging Markets look to continue consolidation in the down draft.

Volatility looks to remain in the normal range keeping the bias neutral to higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all flash consolidation in the longer timeframe but on the shorter one the IWM and SPY are at risk of more pullback while the QQQ heads higher. Use this information as you prepare for the coming week and trad’em well.

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