SPY Trends and Influencers May 13, 2012

Last week’s review of the macro market indicators saw as we recovered from the combined effects of celebrations around Cinco de Mayo and the Kentucky Derby the market was decidedly more bearish. Gold ($GLD) looked to continue in the range with a break biased to the downside while Crude Oil ($USO) looked to crash lower. The US Dollar Index ($UUP) seemed content to move sideways while US Treasuries ($TLT) were biased higher in their consolidation range. The Shanghai Composite ($SSEC) was on the verge of a full blown bull market while Emerging Markets ($EEM) looked to continue to the downside. Volatility ($VIX) looked to remain low but had an increased chance of moving higher. These influencers painted a montage that set up for lower levels for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts agreed with the inter-market set up on the short term but were less convinced on the intermediate term. The SPY looked the strongest with the IWM next and the QQQ the weakest.

The week played out very closely along the lines of the technical story above. Gold and Crude did run lower with Treasuries moving higher. The Dollar Index drifted higher but could not break the range. The Shanghai Composite stalled at resistance on the first attempt while Emerging Markets continued lower and the Volatility Index did move higher but only moderately so. In response the Equity Index ETF’s all dropped slightly but then began building bases for the week. Are they ready for a reversal? 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 moved slightly lower Monday and Tuesday and then spent the week consolidating in a tight range between 134.50 and 137. The rising 100 day SMA has proven support for now. The RSI on the daily chart continues to fall but is starting to level on the edge of a bearish turn with a MACD that is negative but stalling on this timeframe. The weekly chart shows the early 2011 highs acting as support in the continuation of the consolidation zone, or bull flag. The RSI on this timeframe remains bullish but is pointing to more consolidation or a break lower with a MACD that crossed negative after trending lower for several weeks. There is support lower at 134 and 133 followed by 130.25 and 128. Lower would gravitate to 112. Resistance on a move higher is found at 139 and 142.21 before new highs. Downside Short Term Bias within Intermediate Consolidation.

After a dose of family for Mother’s Day the reality of a continued bearish bias will take hold. Gold and Crude Oil look better to the downside with the US Dollar Index and Treasuries looking to continue to strengthen. The bullish flirtation of the Shanghai Composite may be over while the pullback in Emerging Markets continues. The Volatility Index is building pressure to move higher as well. These influencers set a backdrop for the Equity Index ETF’s to continue to the downside. The chart of the QQQ agrees whole-heartedly while the SPY and IWM are mixed with the intermediate term view continuing to hold steady. New highs by Treasuries or the Dollar Index will likely knock everything lower, while a pullback in bonds and the Dollar would provide a floor. Use this information as you prepare for the coming week and trade’m well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview May 12, 2012

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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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