SPY Trends and Influencers January 13, 2018

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 with the first week of the New Year under our belts equity markets looked spectacular, and maybe had run a bit too far too fast. Elsewhere looked for Gold ($GLD) to continue in its uptrend while Crude Oil ($USO) might pause in its move higher. The US Dollar Index ($DXY) was weak but might be finding support while US Treasuries ($TLT) were biased lower in consolidation.

The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) had both broken to the upside in a strong manner, out of consolidation. Volatility ($VXX) looked to remain very low keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts agreed on the longer timeframe, with the SPY and QQQ very strong and the IWM just starting to break out. On the shorter timeframe the SPY and QQQ were overbought and might need a pause, perhaps giving rise to rotation in to the IWM.

The week played out with Gold starting lower but reversing and ending the week higher while Crude Oil continued to a Thursday peak before a digestive pullback. The US Dollar started with a bounce higher but then ended at new lows while Treasuries dropped early in the week but bounced mildly to dampen the loss. The Shanghai Composite continued the move higher but slowed the pace while Emerging Markets digested their move early before making new highs to end the week.

Volatility held in a tight range mainly between 9 and 10, keeping the bias higher for equities. The Equity Index ETF’s all started the week to the upside, paused Wednesday with a digestive pullback and then re-ignited the rest of the week soaring to new all-time highs. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into the week following a stellar start to 2018, up almost 2.5%. It continued where it had left off Monday making another all-time high and followed up with a second all-time high Tuesday. That meant 6 trading days with 6 new all-time highs. Wednesday’s pullback ended that streak but maybe more importantly put the SPY back inside its Bollinger Bands®. Refreshed it pushed higher again Thursday and Friday for two more all-time high closes and another 1.6% gain for the week.

The daily chart shows the price riding the expanding Bollinger Bands® higher. It also shows the RSI in the low 80’s, overbought and rising. The MACD is also moving up. Both are now at levels where the SPY paused and consolidated early in 2017. It is also getting extended from its 20 day SMA. This market is en fuego though! Overbought can remain overbought for some time.

On the weekly picture the march higher has also been astounding. The RSI on the longer timeframe is now nearing 90. It has never been this high. The MACD is also at stratospheric levels. There is no resistance above. Support lower comes at 275 and 273 then 269 and 267. Continued Uptrend.

SPY Weekly, $SPY

Heading into the 3 day weekend for Martin Luther King Day the equity markets continue to fire on all cylinders. Elsewhere look for Gold to continue in its uptrend while Crude Oil blazes its own path higher. The US Dollar Index is in trouble and may be on the verge of a break down while US Treasuries consolidate in a broad range. The Shanghai Composite and Emerging Markets have broken their consolidation to the upside and look to continue higher.

Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The IWM has finally joined the party moving to new highs while the SPY and QQQ have continued to trade in tandem. Their charts all look strong on both the short and long time frame. 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 January 12, 2018

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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.

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