Last week’s review of the macro market indicators noted that heading into January Options Expiration on a short Holiday week, the Equity Indexes looked healthy and consolidating if not outright bullish. Elsewhere looked for the bounce in gold (NYSE:GLD) to meet some resistance and possibly stall out while crude oil (NYSE:USO) churned sideways. The US dollar index was poised to continue lower, pulling back in its uptrend, while US Treasuries (NASDAQ:TLT) ran the same risk as gold, finding resistance in the bounce and dropping.
The Shanghai Composite looked to continue to bounce in a tight range mainly sideways as Emerging Markets (NYSE:EEM) broke to the upside. Volatility (NYSE:VXX) looked to remain non-existent keeping the bias higher for the equity index ETF’s SPY (NYSE:SPY), IWM (NYSE:IWM) and QQQ (NASDAQ:QQQ). Their charts remained positive with the IWM and SPY in consolidation while the QQQ marched higher.
The week played out with gold probing higher before pulling back at the end of the week while crude oil did the opposite, starting lower but then rebounding late in the week. The US dollar back tested and held its breakout level while Treasuries found trouble at that overhead resistance and pulled back. The Shanghai Composite is stalled at 3100 while Emerging Markets pulled back from their high.
Volatility remained subdued. The Equity Index ETF’s basically moved sideways all week. The SPY did so in a tight 1 point range, the IWM with a slight drift lower in a 2 point range and the QQQ a slight drift higher in a range slightly more than 1 point. What does this mean for the coming week? Lets look at some charts..
SPY Daily
The SPY had one of its quietest weeks ever. The total range for the week was only 1.90 points. It would have been 0.30 points less if the SPY did not start out breaking a range to the upside Friday before pulling back. That is less than an 85 bp range. The good news is that it held over the 20 day SMA all week as well, and is within a couple of points of the all-time high still. The RSI on the daily chart is running mostly flat just under 60, firmly in the bullish zone, while the MACD is falling. Really not a bad week.
The weekly chart shows the all-time high area as resistance and a continued sideways consolidation underneath it. The RSI on this timeframe is bullish as well and the MACD is rising. A stronger picture on this timeframe. There is resistance at 228.34 and then free air. A break higher would have a Measured Move to 248. Support lower comes at 225 and 224 followed by 221.75 and 220. Consolidation in the Uptrend Continues.
SPY Weekly
With the Inauguration and January Options Expiration in the rearview mirror, the equity markets held up very well and remain strong on the longer timeframe. Elsewhere, look for gold to consolidate its uptrend or pullback while crude oil moves sideways in a range. The US dollar index looks better to the downside in the short run while US Treasuries are resuming their move lower. The Shanghai Composite is stuck at 3100 and does not look to change that soon while Emerging Markets look tied in their move higher and ready for a pullback.
Volatility should remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show the QQQ remaining the short term leader as it creeps to new all-time highs, while the SPY and IWM consolidate moving sideways in the short run. In the longer timeframe all 3 look strong. Use this information as you prepare for the coming week and trad’em well.
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