SPY Trends and Influencers April 14, 2017

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 saw heading into the holiday shortened week for Easter, that the equity markets looked a bit vulnerable in the short run and stronger in the intermediate. Elsewhere looked for Gold ($GLD) to consolidate in its uptrend while Crude Oil ($USO) continued higher. The US Dollar Index ($DXY) looked better to the upside while US Treasuries ($TLT) remained in their consolidation range.

The Shanghai Composite ($ASHR) looked to continue to plod slowly higher and Emerging Markets ($EEM) also continued to look strong. Volatility ($VXX) looked to remain at abnormally low levels keeping the wind at the back of the equity Index ETF’s as they all consolidated. The $SPY and $IWM looked more vulnerable than the $QQQ on their daily charts. All looked stronger on weekly charts with the IWM showing the strongest potential for an early move.

The week played out with Gold moving higher towards 1300 while Crude Oil started higher but met resistance Thursday and gave some back. The US Dollar met resistance and pulled back making a lower high while Treasuries found a bid and moved higher, but still holding in the range. The Shanghai Composite muddled along sideways at the recent highs while Emerging Markets found short support and drifted higher.

Volatility picked up a little, but remained with in normal ranges. The Equity Index ETF’s all started the week moving positive but quickly gave that up and reversed lower. The SPY and QQQ held there recent support levels with steady move lower but only a minor pullback, while the IWM showed strength early and erased it later, also for a small loss on the week. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into the week consolidating in a triangle between the tightening 20 and 50 day SMA’s. Monday was a repeat of the Friday before, a doji in the range. But Tuesday saw a break to the downside. It recovered by the end of the day, printing a Hammer, a possible reversal. This was not confirmed though, and Wednesday saw a move lower. Thursday continued to the downside, finishing at the low of the week.

The range was still small, less than 4 points, but the acceleration Thursday will have biases turning. The daily chart shows that the SPY finished outside of the Bollinger Bands®. This has led to reversals recently. The RSI is moving into the bearish zone with the MACD crossed down and moving into negative territory. These support more downside. Note that a reversal here would trigger a Positive RSI Reversal with a target to about 238, meaning a higher high.

The weekly chart looks a lot less scary, more of a bull flag. The RSI on this timeframe has worked off the overbought condition and is strong in the bullish zone with the MACD crossed down and resetting lower. There is support lower at 231.80 and 229.40 then 228.25 and 225.80. Resistance above sits at 233.70 and 236 followed by 237.10 and 239.80. Short Term Downward Bias in Broad Consolidation.

SPY Weekly, $SPY

With Easter behind and April options Expiration ahead, equity markets are looking a bit weaker short term as they give up some ground. Elsewhere look for Gold to continue in its uptrend while Crude Oil also moves higher. The US Dollar Index has moved into broad consolidation while US Treasuries are biased higher short term and may be reversing. The Shanghai Composite looks to continue to drift higher as Emerging Markets consolidate their recent move up.

Volatility looks to remain low, but higher than it has been and with a short term bias to continue up. This alone should not be enough to put a damper on equities but could contribute. The equity index ETF’s SPY, IWM and QQQ, all look ready to continue to give ground in the short run. In the intermediate view they are all stronger with the QQQ strongest and IWM next and the SPY the least positive. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview April 14, 2017

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