SPY Trends and Influencers March 4, 2017
- Posted by Greg Harmon
- on March 4th, 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 saw heading into March that the Equity markets looked strong on the longer time frame but were showing more signs of short term weakness taking hold. Elsewhere looked for Gold ($GLD) to continue higher in its uptrend while Crude Oil ($USO) churned with a bias for a break to the upside. The US Dollar Index ($DXY) looked better to the upside while US Treasuries ($TLT) consolidated further.
The Shanghai Composite ($ASHR) continued to drift higher while Emerging Markets ($EEM) were showing some weakness in their uptrend. Volatility ($VXX) looked to remain at abnormally low levels keeping the wind at the back of the equity index ETF’s $SPY, $IWM and $QQQ. Their long term charts all continued to look strong while the short term charts hit a set back and could continue a drift lower short term.
The week played out with Gold stalling out Monday and driving lower all week while Crude Oil remained in the consolidation range, pressing to the bottom. The US Dollar moved slightly higher while Treasuries found trouble at that overhead resistance again and pulled back in the range. The Shanghai Composite met short term resistance and turned sideways while Emerging Markets pulled back to support.
Volatility remained at abnormally low levels, avoiding the teens. The Equity Index ETF’s started the week on a positive note holding steady or moving higher, and then gapped up to new all-time highs Wednesday. But Thursday and Friday saw a pullback, with the IWM and QQQ filling their gaps and the SPY finding support at its gap, and then all of them bouncing. What does this mean for the coming week? Lets look at some charts.
The SPY started the week Monday with a new all-time closing high. Hard to remember that now that it is Friday. It held with a tight body candle Tuesday, for a new all-time high monthly close. It then gapped higher to another new all-time high Wednesday. Thursday and Friday saw some retracement of the gap higher, but not enough to close it, making for a new all-time high weekly close as well. Lots of all-time highs. A good reminder that the market is going up and strong, not a feature of a top.
The daily chart shows the RSI pulling back to near 70, still slightly overbought but nothing that should concern a long holder. The MACD is level, and maybe heading towards a cross down. Perhaps it is in for some sideways price action. The weekly chart shows another strong week higher. The upper shadow may turn into something but still strong for now.
The RSI is poking into technically overbought territory, but that is a good place, showing strength in the low 70’s. The MACD is rising, also a positive. There is a Measured Move to 248 above. The only resistance stands at Wednesday’s high at 240. Support lower could show up at 237.10 and 233.75 followed by 232.20 and 229.75. Continued Uptrend.
Heading into the first full week of March the equity markets have entered more like a lion than a lamb. Elsewhere look for Gold to continue the pullback in its uptrend while Crude Oil consolidates with a bias for a break to the downside. The US Dollar Index looks to continue higher short term while US Treasuries continue to consolidate in their downtrend. The Shanghai Composite continues to drift higher while Emerging Markets pullback in their uptrend.
Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show continued strength in the SPY and QQQ, especially on the longer timeframe, with the IWM in consolidation mode again on both timeframes. Use this information as you prepare for the coming week and trad’em well.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)