SPY Trends and Influencers 7/10/2011

• Posted by Greg Harmon
• on July 10th, 2011

Last week’s review of the macro market indicators looked for Gold ($GLD) to continue lower with Crude Oil ($USO) biased to the upside but defined by the range between 88 and 102, I know that is big just stay away from the middle. The US Dollar Index ($UUP) looked headed higher to test the trend break in a bear flag, while US Treasuries ($TLT)continue lower. The Shanghai Composite ($SSEC) was headed higher towards a test of the breakdown while Emerging Markets ($EEM) continue higher to resistance. The Volatility Index ($VIX) looked to remain stable allowing a run higher by the Equity Indexes toward previous highs from April.

The week began with Crude Oil and the US Dollar Index acting as the charts suggested, both heading higher. But Gold also moved higher. US Treasuries consolidated and then rose Friday. The Shanghai Composite held higher in a narrow range while the Emerging Markets found resistance and bounced. Volatility remained low and the Equity Index ETF’s $SPY, $IWM and $QQQ moved 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.)

iShares Barclays 20+ Yr Treasury Bond Fund Weekly, $TLT

US Treasuries, proxied by the ETF TLT, consolidated testing support just above the 38.2% retracement of the move from August 2010, before moving higher Friday. The daily chart shows that it stopped Friday between the 20 and 50 day SMA. The RSI on the daily chart is moving sharply higher and the MACD is improving. On the weekly chart above the RSI bounced hard off of the mid line but the MACD is diverging lower. Not unusual signs in a symmetrical triangle. The center of the triangle is a range between 95.50 and 97.30. Look for the TLT to have a short term bias to the upside but capped at the 97.30 area in the coming week. If it does get over 97.30 then a test of 102.50 is possible. Any move lower looks to find support at 93 and then the 8 year rising trend at 90.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY settled into a flag higher after pulling back from a gap higher on Thursday. The daily chart shows the RSI curling lower off of the 70 area with a MACD that is leveling and starting to move lower. Both suggest downside to come despite the positive price action. The weekly chart shows a move higher to retest the trend line from the March 2009 lows printing an evening star or spinning top. The shadows are in between. The RSI is moving higher and the MACD is improving towards a potential positive cross. The short term trend remains higher and expect more upside for the coming week with resistance at 135.5 and then 136.50. Any pullback should find some support at 131.46 and below that 130.

The coming week looks for Gold and Crude Oil to both continue higher. The US Dollar Index and US Treasuries to move higher towards resistance at 77.30 and 97.30 respectively. The Shanghai Composite and Emerging Markets also are biased to the upside, although both have resistance nearby. Volatility looks to remain stable and subdued allowing for the Equity Index ETF’s SPY, IWM and QQQ to continue higher. But each are showing signs of a pullback in the short timeframe that could translate into the weekly timeframe quickly, with Treasuries moving higher as a possible catalyst. Look for upside but keep the stops tight. A reversal could come quickly. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. Trade’m well.

Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview July 9, 2011

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