SPY Trends and Influencers January 15, 2012

• Posted by Greg Harmon
• on January 15th, 2012

Last week’s review of the macro market indicators looked with the first week in the books that the tone of the Equity markets was becoming positive. Several areas were still likely to consolidate further before moving though. Gold ($GLD) was one of them and it looked likely to move lower when done consolidating, while Crude Oil ($USO) was biased higher. US Treasuries ($TLT) looked to break consolidation higher while the US Dollar Index ($UUP) just kept rocketing higher. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked to break their ranges to the downside, while Volatility ($VIX) continued lower. These factors combined to create an environment where there was a slight upward bias to equities, given the recent correlation with the US Dollar Index. And the charts of the Equity Index ETF’s $SPY and $QQQ reflected that bias. The $IWM was more neutral.

The week began with Gold moving a bit higher around the 200 day Simple Moving Average (SMA) and Oil consolidating before both moved lower late in the week. The US Dollar expanded in a range before moving higher on Friday following Treasuries which moved up all week. The Shanghai Composite broke higher out of the consolidation range and Emerging Markets drifted up for the week. Volatility consolidated at the lower levels before testing the 20 day SMA Friday. The Equity Index ETF’s all moved higher and then started printing consolidation or topping candles to run out the week. What does this mean for the coming week? Lets look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY gapped higher and created a new island for the week, finally closing the gap lower on Friday. The trend remains higher with a bullish RSI and MACD on the daily chart. They both show signs of resting in their moves up so there may be some consolidation to come. The RSI on the weekly continues to flirt with the bullish 60 level growing very slowly while the MACD continues to grow more positive. The price action continues to follow the Fibonacci Arc higher resolving last week’s doji to the upside. Resistance higher comes at 130 followed by 131.77 and then 135. On a pullback there is support lower at 126.20 and then 125 before it becomes a short term trend lower. Then there is support at 121.30. Until then the uptrend continues.

Heading into another holiday shortened week the markets continue to improve. Gold looks likely to head a bit lower while Crude Oil consolidates in the short term within the broad 95-102.5 range. Both the US Dollar Index and Treasuries are biased to the upside although Treasuries may continue in their consolidation range. The Shanghai Composite and Emerging Markets look better to the downside with a chance that Emerging Markets consolidate sideways. Volatility looks to continue lower but likely at a slower pace. These inputs set up a scenario where the US Equity Index ETF’s SPY, IWM and QQQ can continue higher. The charts for the SPY and IWM agree moving to new higher highs and looking ready for more. The QQQ has run up against resistance so it may take some time to get through but is also biased higher. Use this information as you prepare for the coming week and trade’m well. If you found this too confusing this week there is a link to the Abridged Version below.

Macro Market Preview……Abridged Version

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview January 14, 2012

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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