SPY Trends and Influencers July 12, 2014

• Posted by Greg Harmon
• on July 12th, 2014

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 suggested, as July gets into full swing that the equity markets looked very strong. Elsewhere looked for Gold ($GLD) to continue in its uptrend while Crude Oil ($USO) continued lower in a pullback in the uptrend. The US Dollar Index ($UUP) looked to move sideways while US Treasuries ($TLT) consolidated but were biased lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to the upside. Volatility ($VIX) looked to remain unusually low and actually biased lower keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed strength but with the QQQ was possibly getting extended and the IWM was near prior resistance.

The week played out with Gold running sideways before pushing higher to end the week up while Crude Oil continued down and is jeopardizing the intermediate uptrend. The US Dollar moved slightly lower off of resistance while Treasuries bounced making a higher high. The Shanghai Composite met resistance and pulled back while Emerging Markets continued to hold at highs near resistance. Volatility probed higher only to be slapped back and end the week back in the recent low range. The Equity Index ETF’s all continued their retreats but the end of the week saw a bit of strength in the QQQ and signs of life from the SPY and IWM, as they all ended their slides, for now at least. 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 started the week with a mild pullback into the Bollinger bands and closing the pre-holiday gap up. But the downside damage continued to the 20 day SMA and beyond before a bounce. The Hollow Red Candle Thursday, showing strong intraday strength, was followed Friday by a continuation higher, back over the 20 day SMA. If Thursday’s low holds up, it will continue the series of higher lows and higher highs => Uptrend. The daily chart shows the RSI making a lower low though and the MACD heading lower. Technically if the RSI were to reverse higher it would trigger a RSI Positive Reversal and carry a target of 199.22. But until it does turn the momentum indicators support more downside. A move under 194.12 would negate the RSI Reversal potential. On the weekly chart the picture is of an inside body. The RSI is holding bullish at the 70 level and the MACD is level after a rise. There is resistance at 198.29 and then the round number 200 and a prior Measured Move to 202.50 as upside targets. Support lower may come at 196.50 and 194 followed by 193 and 190.40. Consolidation or Short Term Pullback in the Uptrend.

Heading into July Options Expiration Week the Equity markets are mixed. Elsewhere look for Gold to continue in its uptrend while Crude Oil continues lower. The US Dollar Index seems content to move sideways while US Treasuries are biased higher but may consolidate. The Shanghai Composite is stuck in sideways consolidation while Emerging Markets are biased to the upside while they consolidate. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The QQQ looks the strongest of the bunch reversing higher followed by the SPY but with the IWM looking weak. Use this information as you prepare for the coming week and trad’em well.

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