SPY Trends and Influencers February 13, 2016

• Posted by Greg Harmon
• on February 13th, 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 found that the groundhog did not see his shadow and so an early Spring was in store, but it did not seem like winter was over for equity markets. Heading into the second week of February equity markets were weak and looking to get worse. Elsewhere looked for Gold ($GLD) to continue in its uptrend while Crude Oil ($USO) consolidated broadly in the downtrend. The US Dollar Index ($UUP) looked better to the downside in consolidation in the short run while US Treasuries ($TLT) were set to continue higher.

The Shanghai Composite ($ASHR) seemed like the week off for the Chinese New Year was required and Emerging Markets ($EEM) looked to continue their consolidation in the downtrend. Volatility ($VXX) looked to remain elevated keeping the bias lower for the equity index ETF’s $SPY, $IWM and $QQQ. The indexes themselves all looked weak and ready for more downside with the strongest, the SPY, trying to consolidate in its downtrend.

The week played out with Gold driving higher before falling back Friday while Crude Oil made new multi-year lows before bouncing Friday. The US Dollar continued lower while Treasuries exploded higher before a Friday pullback. Emerging Markets gapped lower and held in a tight range.

Volatility spiked to the January high before dropping back Friday. The Equity Index ETF’s gapped lower Monday and held in a range the rest of the week. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY started the week with a gap down Monday to the prior January lows. Tuesday saw a start lower and strong intraday move higher, but an upper shadow, leaving that gap open. Wednesday closed that gap but left a long upper shadow and a move lower. That was followed by a gap down Thursday and a Hollow Red candle, signaling intraday strength. This is a possible reversal, and it was confirmed with a big move higher Friday. In all a possible double bottom if it can continue.

The daily chart shows a RSI turning up off of a slightly higher low, a positive, with the MACD turning back up after a shallow pullback, and crossing. These support more upside. On the weekly chart the Hammer is also a possible reversal, if confirmed. But the RSI continues to trend lower while the MACD is falling.

There is resistance at 187 and 188 followed by 189.50 and 191.50 before 194.50. Support lower comes at 184.60 and 181.35 followed by 178.15. Short term positive divergence, but intermediate lower. Possible Short Term Bounce or Consolidation in Downtrend.

SPY Weekly, $SPY

Heading into the February Operations Expiration Week, the equity markets started with a weak move lower and then consolidation with a promise Friday. Elsewhere Gold looks overdone to the upside and ready for a pullback while Crude Oil bounces in the downtrend. The US Dollar Index has short term strength in the downturn while US Treasuries may also be overdone to the upside and ready to pullback.

The Shanghai Composite comes back after a week off looking to consolidate while Emerging Markets consolidate in their downtrend. Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ. Their charts show possible reversals higher in the downtrend in the short run, but intermediate weakness remains. Use this information as you prepare for the coming week and trad’em well.

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