SPY Trends and Influencers 7/31/2011

• Posted by Greg Harmon
• on July 31st, 2011

Last week’s review of the macro market indicators looked for the move higher in Gold ($GLD) and Crude Oil ($USO) to continue. The US Dollar Index ($UUP) and US Treasuries ($TLT) conversely are set up to move lower, with a chance of Treasuries just running in place. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) look as though they may test the top of their consolidation ranges. Volatility ($VIX) appears to remain muted and allow for the Equity Indexes $SPY, $IWM and $QQQ to continue to test higher and perhaps break their consolidation ranges, with the QQQ already making a new high.

The week began with Gold gapping higher and rising through the week while Crude Oil fell modestly. The US Dollar Index consolidated in a lower range while US Treasuries remained stable until a big move Friday. The Shanghai Composite fell Monday and then consolidated while Emerging Markets remained in their range. The Volatility Index climbed slowly all week finishing at its highs just at the top of the range pushing Equity Indexes SPY, IWM and QQQ lower on the week and back towards the middle of their ranges. What does this mean for the coming week? Let’s 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, as measured by the ETF TLT, continued their consolidated most of the week before rocketing higher on Friday. The daily chart shows a rising Relative Strength Index (RSI) and a Moving Average Convergence Divergence (MACD) indicator that crossed positive, suggesting more upside, on heavy volume Friday. The weekly chart shows that the move finally pushed it through the middle range of the symmetrical triangle, from 95.50-97.30. It also shows the increasing volume as the RSI and MACD point higher. Look for US Treasuries to continue higher, if they hold the 97.30 break, and a test of 100 and then the top rail at 102.50. Losing the break should see support in the 95.50 area.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY began the week in consolidation mode before beginning a plunge on Wednesday through the support of the previous downtrend line. Friday’s candle with long shadows signals some indecision. The RSI pointing lower and the MACD growing more negative on the daily timeframe suggest resolution of the indecision to the downside. The weekly chart is not so clear as it remains in the 126-136.50 range from the past six months. The RSI on this timeframe suggests lower but the MACD is improving. Look for a bias to the downside in the coming week but within the range above 126. A confirmation higher, by a move above 130 would suggest more range bound trading in the coming week. The upside resistance at 131.46 and then 134.12 should halt any rallies.

Gold and US Treasuries look to continue their moves higher in the coming week, with Crude Oil and the US Dollar Index continuing lower. The Shanghai composite looks to consolidate further in the middle of its range while Emerging Markets do the same at the upper end of their range. Volatility looks biased to the upside contributing to the view that Equity Indexes, SPY IWM and QQQ will continue lower. All look to remain within their ranges with the QQQ remaining the strongest much higher in its range. News driven breaks to the upside should be contained in the range with the possible exception of the QQQ’s. 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 30, 2011

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus