SPY Trends and Influencers August 26, 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 noted that with August options expiration completed the equity index ETF’s suffered some short term damage. Elsewhere looked for Gold ($GLD) to continue in its uptrend with Crude Oil ($USO) joining it moving higher. The US Dollar Index ($DXY) continued to move sideways in the downtrend while US Treasuries ($TLT) climbed higher. The Shanghai Composite ($ASHR) looked to continue to drift higher as Emerging Markets ($EEM) consolidated in their uptrend.

Volatility ($VXX) looked to remain closer to the normal range and off of the abnormally low levels of the spring and early summer. This removed any support for equities in the short run. The equity index ETF’s $SPY, $IWM and $QQQ, all continued to show weakness in the short term but with all at support levels and printing possible reversal candles. Longer term their uptrends remained intact.

The week played out with Gold finding resistance and stalling at the round number 1300 while Crude Oil rose modestly. The US Dollar held at the recent lows while Treasuries moved higher. The Shanghai Composite finally broke through the resistance area at 3300 while Emerging Markets moved up to new 3 year highs.

Volatility pulled back to the normal range, reducing the drag on equities. The Equity Index ETF’s found short term support in their pullbacks and moved slightly higher. The QQQ remains the strongest holding over support with the SPY next and the IWM still near lows of the year. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into the week following a doji that came after a near bearish Marubozu candle. It was also outside of its Bollinger Bands®. These were good conditions for a reversal, and Monday saw a move higher, but barely, and just to the edge of the Bollinger Bands. Tuesday it gapped up and had a stronger day though getting back over the 50 day SMA. It held there the rest of the week in a tight range.

A positive week, but with some work left before it can be declared safe to go higher again. A move over the August 16th high would be a first indication, a higher high, and then new highs over 248. The daily chart shows the rising trend line now acting as resistance. It also shows the RSI stalling and then trying higher again as it hits the mid line. The MACD is leveling.

On the longer weekly timeframe the white candle after 2 red ones is a welcome sight. It touched the 20 week SMA and held another bullish sign. The RSI is turning back higher after a small pullback in the bullish zone while the MACD is slowly moving lower. There is support at 244 and 242 followed by 240 and 238 then 237.10. Resistance above sits at 246 and then 248. Consolidation or Pullback in the Uptrend.

SPY Weekly, $SPY

Jackson Hole is behind and now the markets look ahead to the Labor Day weekend at the end of next week with the equity markets improved, but still lacking strength. Elsewhere look for Gold to consolidate at 1300 in its uptrend while Crude Oil drifts higher slowly. The US Dollar Index remains weak and better to the downside while US Treasuries are biased to continue higher. The Shanghai Composite looks to continue higher after a big break out and Emerging Markets are better to the upside working through long term resistance.

Volatility looks to remain low putting the bias back higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are all looking good on the longer timeframe but mixed in the shorter timeframe. The QQQ is the strongest and is consolidating, while the SPY continues to be at some risk for further pullback, and the IWM is reversing but the weakest, under its 200 day SMA. 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 August 25, 2017

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