SPY Trends and Influencers January 14, 2017

• Posted by Greg Harmon
• on January 14th, 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 heading into the first full week of 2017 the equity index ETF’s looked strong, as if they had a restful holiday break. Elsewhere looked for Gold ($GLD) to continue the bounce in its downtrend while Crude Oil ($USO) continued higher. The US Dollar Index ($DXY) looked to continue to digest its break out while US Treasuries ($TLT) continued their bounce in the downtrend.

The Shanghai Composite ($ASHR) was resuming its uptrend and Emerging Markets ($EEM) were biased to continue higher short term as well. Volatility ($VXX) looked to remain at abnormally low levels keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts all looked great for more upside on the longer timeframe. On the shorter timeframe the QQQ looked to be the leader moving higher while the SPY was not far behind and the IWM consolidated.

The week played out with Gold continuing higher to 1200 while Crude Oil started lower but rebounded late in the week, recovering much of the loss. The US Dollar continued its pullback while Treasuries met some overhead resistance and stalled. The Shanghai Composite gave back some its recent gains while Emerging Markets moved higher and are confirming a reversal. Volatility remained at abnormally low level all week. The Equity Index ETF’s saw the SPY and IWM remaining in a tight range all week. The QQQ started with another new all-time high before tightening its range as well, then ending at an all-time high with a move higher Friday. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY ended last week with a move over its 20 day SMA after a small dip. It looked promising for more but all it could do this week was remain above that 20 day SMA and hold in a tight range under the all-time high. The daily chart shows the RSI running sideways at 60, in the bullish zone, while the MACD is level after pulling back and about to print a bullish cross through time.

Not much to write about but one thing to note going forward. The Bollinger Bands® have squeezed in, often a precursor to a stronger move. A quick look at the open interest for January options expiration next week shows a very large level at the 230 strike compared to all other levels. This would be an early candidate for a possible pin next Friday.

The weekly chart is showing the consolidation as well now. But on this timeframe the Bollinger Bands are opening as price creeps along the upper band. The RSI on this timeframe is flat and firmly in the bullish zone while the MACD is rising. There is resistance at 228.34, the intraday all-time high and then nothing above. A break of the weekly bull flag would give a target to about 246. There is support lower at 226.50 and 225 followed by 224 and 221.75 then 220. Continued Consolidation in Uptrend.

SPY Weekly, $SPY

Heading into January Options Expiration on a short Holiday week, the Equity Indexes look healthy and consolidating if not outright bullish. Elsewhere look for the bounce in Gold to meet some resistance and possible stall out while Crude Oil churns sideways. The US Dollar Index is poised to continue lower, pulling back in its uptrend, while US Treasuries run the same risk as Gold, finding resistance in the bounce and dropping.

The Shanghai Composite looks to continue to bounce in a tight range mainly sideways as Emerging Markets break to the upside. Volatility looks to remain non-existent keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts remain positive with the IWM and SPY in consolidation while the QQQ marches higher. Use this information as you prepare for the coming week and trad’em well.

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