SPY Trends And Influencers: January 20, 2013

Last week’s review of the macro market indicators suggested, heading into the week that the broad markets continued to look good but with some caution creeping in. Gold (GLD) might be bottoming but needed to prove it while Crude Oil (USO) continued the trend higher. The US Dollar Index (UUP) looked to move in a tight range with a downside bias while US Treasurys (TLT) were biased higher in the downtrend.

The Shanghai Composite (SSEC) was finally taking a breather and looked better lower with Emerging Markets (EEM) consolidating but biased to the upside. Volatility (VIX) looked to remain subdued and maybe even move lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agreed with the SPY and IWM the strongest and the QQQ’s lagging a bit.

The week played out with Gold continuing along with Crude Oil. The US dollar started lower but bounced, although remaining in the tight range while the Treasury move higher got kicked back later in the week. The Shanghai Composite consolidated its gains while Emerging Markets did the same. Volatility managed to head lower breaking the recent lows. These allowed the Equity Index ETF’s to continue their slow grind higher led by the SPY and IWM, making new multi-year highs, with the QQQ moving sideways. What does this mean for the coming week? Let's look at some charts.

SPY Daily (SPY)

SPY Weekly (SPY)

The SPY broke consolidation mid-week and moved up to close at new highs putting the Inverse Head and Shoulders price objective of 157 in the crosshairs. The Relative Strength Index (RSI) on the daily chart is bullish and rising with room before worries of being overbought with a Moving Average Convergence Divergence indicator (MACD) that is positive and moving higher. The rising volume on the breakout is also a plus for bulls. The weekly chart shows prices back above the rising trend line after a move off of the 20-week SMA.

All of the Simple Moving Averages (SMA) are rising showing the strength of the trend with the RSI bullish and rising and the MACD just crossing into positive. There is nothing but bullishness in the charts. Look for the round number 150 to potentially slow things down with that 157 target above. Support is now found at 147.10 and 145.40 followed by 144.44 and then the gap to 142.56. Continued Upside.

Heading into the shortened holiday week the markets continue to look bullish. Gold looks set to continue higher within the sideways channel while Crude Oil continues its rise. The US Dollar Index seems content to move sideways while US Treasuries are biased higher in the downtrend. The Shanghai Composite and Emerging Markets are biased to the upside on a break of their recent consolidations.

Volatility looks to remain low and biased to move lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. There seems to be some rotation from the IWM into the SPY and now the QQQ is clearly lagging in a consolidation zone, keep an eye on it. Use this information as you prepare for the coming week and trade’m well.

Disclaimer: 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.

Original post