SPY Trends and Influencers September 1, 2012
- Posted by Greg Harmon
- on September 1st, 2012
Last week’s review of the macro market indicators saw heading into the last week of unofficial Summer, Gold ($GLD) and Crude Oil ($USO) poised to continue higher with a chance of consolidation for either. The US Dollar ($UUP) Index seemed biased lower in the uptrend while US Treasuries ($TLT) might move in a tight range. The Shanghai Composite ($SSEC) looked lower still and Emerging Markets ($EEM) looked like consolidation or small pullback within the uptrend. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The whole picture, except for some risk if Treasuries pop higher, sets up positive for equities. The charts of the Index ETF’s were not so certain though. The SPY and QQQ both looked much better to the upside especially in the longer timeframe but the IWM seemed more comfortable in a range for the time being with an upward bias.
The week played out with Gold consolidating in a bull flag and Crude Oil dipping slightly. The US Dollar Index and Treasuries consolidated most of the week. All of that changed Friday with Gold, Oil, and Treasuries leaping while the Dollar fell. The Shanghai Composite continued to move lower along with Emerging Markets. Volatility continued the bounce off of the lows but remained subdued. With all this the Equity Index ETF’s remained in a tight range. 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 continued the consolidation at the highs this week. The Bollinger bands are getting extremely tight on the daily timeframe foreboding a move. The Relative Strength Index (RSI) is holding bullish but trending lower with a kink up to end the week. The Moving Average Convergence Divergence indicator (MACD) is negative but stable. No real information there but a slight short term downside bias. On the weekly timeframe the consolidation at the top is evident. The RSI on this timeframe is bullish and kinking lower in an uptrend, reverse of the daily chart. The MACD is positive and has been trending higher as well. There is resistance higher at 143.09 and then a Measured Move to 153.60. Support below is found at 140 followed by 137.90 and 135.40. Chance of Short Term Pullback within the Uptrend.
As September begins look for Gold and Crude Oil to move higher with a chance that Crude consolidates. The US Dollar Index looks to continue lower while US Treasuries are moving up. The Shanghai Composite and Emerging Markets look to continue their downside moves with the chance that Emerging Markets find support nearby. Volatility looks to remain subdued but drifting higher keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY looks the most vulnerable of the three for a pullback and all three could easily continue sideways. Watch Treasuries, as their break higher would typically signal a pullback in Equities. Use this information as you prepare for the coming week and trade’m 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)