SPY Trends and Influencers July 7, 2018

Last week’s review of the macro market indicators noted as the books closed on the 2nd Quarter and we prepared for a holiday shortened 4th of July week, equity markets looked to have run out of gas. Maybe the short week would re-energize them. All three indexes had a positive quarter with the IWM just out pacing the QQQ, 7.9% to 6.5% and the SPY gaining 3.1%. The QQQ won the month up 0.9% to the 0.6% for the IWM and the SPY eked out a 0.1% gain. The monthly candles all looked toppy with long upper shadows, while the quarterly candles were all looking strong.

Elsewhere Gold ($GLD) looked as it may pause in its downtrend while Crude Oil ($USO) continued to race higher. The US Dollar Index ($DXY) was pausing in its uptrend while US Treasuries ($TLT) were on the edge of a break out to the upside. The Shanghai Composite ($ASHR) might be ready to pause in its downtrend while Emerging Markets ($EEM) were setting up for a possible reversal higher. Volatility ($VXX) looked to remain low but above recent levels keeping the wind at the backs of the equity markets but with the breeze blowing softer.

The equity index ETF’s $SPY, $IWM and $QQQ, all had a mixed week with early signs of strength Friday fading into the close, leaving questions about the short term. The longer weekly timeframe was much less troublesome showing consolidation for the SPY continuing and the IWM and QQQ digesting recent moves higher.

The week played out with Gold finding support and pushing higher while Crude Oil met sellers and recoiled before a bounce Friday. The US Dollar pulled back in its uptrend while Treasuries held up at resistance trying to break out to the upside. The Shanghai Composite continued its ramble to the downside while Emerging Markets found some footing and stabilized.

Volatility pulled back from last week’s blip to the upside, putting a tailwind behind equities. The Equity Index ETF’s started the wee moving back up to recent short term resistance, and then all broke through to the upside on Friday with the IWM leading the way. The SPY and QQQ are now out of a two week range and moving upi with the IWM attacking its all-time high. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY had printed a strong reversal with 1 day left in the 2nd Quarter and then followed it up with a dud, trying higher but giving up all the gains and finishing the week in a short term range. Monday opened lower and rose all day, a sign of strength, but again it gave it up Tuesday in the shortened session. Another move higher Thursday saw a close over the 20 day SMA and then follow through Friday following the jobs report.

It ended the week over the short term resistance and closed the gap from June 25th. It also printed a RSI driving back higher in the bullish zone with the MACD ready to cross up and into positive territory on the daily chart. The Bollinger Bands® give it a lot of upside potential before any problems.

The longer weekly chart shows a push higher out of a bull flag, with a target to 289. The RSI is lifting off of the mid line with the MACD moving higher and positive. There is resistance at 277.50 and 279 then 280 and 283. Support lower comes at 274.50 and 272.50 then 271.40 and 269 before 267.50. Short Term Uptrend Resumes.

SPY Weekly, $SPY

With the 4th of July behind, slow holiday trading has begun and it seems to be good for equities so far. Elsewhere look for Gold to bounce in its downtrend while Crude Oil may pause in its uptrend. The US Dollar Index is also pausing in its uptrend while US Treasuries are breaking out to the upside. The Shanghai Composite continues to look better lower but may have a short term pause while Emerging Markets may be reversing to the upside after a several months long pullback.

Volatility looks to continue to creep lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look good in the long term with the IWM the strongest in the short run, but the SPY and QQQ reversing higher out of support. Use this information as you prepare for the coming week and trad’em well.

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