SPY Trends And Influencers: January 5, 2013

Last week’s review of the macro market indicators suggested, as the last day of 2012 approached Gold (GLD) continued to look lower while Crude Oil (USO) showed an upside trend continuing. The US Dollar Index (UUP) and US Treasurys (TLT) seemed content to move sideways with US Treasurys biased higher and the Dollar Index lower.

The Shanghai Composite (SSEC) and Emerging Markets (EEM) were both biased to the upside with risk of Emerging Markets consolidating further first. Volatility (VIX) jumped and was looking to be relatively higher than recently switching the bias for the equity index ETF’s SPY, IWM and QQQ lower, with the QQQ looking the worst and IWM the strongest.

The week played out with Gold moving higher before getting shellacked late in the week while Crude Oil moved up to short term resistance. The US dollar broke higher and Treasurys lower, the opposite of the chart set-ups. The Shanghai Composite continued to to move higher in a very short week while Emerging Markets gave up some of their gains, after making new highs.

Volatility dropped off giving back all of the up move and some from last week. The Equity Index ETF’s jolted higher on the New Years Eve session and followed that with a gap and hold the rest of the week, strong. What does this mean for the coming week? Let's look at some charts.

SPY Daily (SPY)
SPY Weekly (SPY)
The SPY found a bottom Monday near the 200-day SMA and worked higher. After the New Year’s break it gapped higher over the downtrending resistance line and held there the rest of the week, adding a strong finish Friday. The RSI on the daily timeframe is bullish and rising and the MACD is positive and increasing, both supporting further upward price movement. As it moves higher it is riding the upper Bollinger band, another good sign.

The only caution on the daily timeframe is that it now extended from the SMAs. Moving out to the weekly picture shows a move higher off of the bottom of a rising wedge to the top of the Bollinger bands. It would feel more comfortable to look higher if those Bollinger bands were opening up. The RSI is bullish and rising though and the MACD is about to cross to positive. These do support more upside.

There is resistance higher at 147.16 and 148.11 and then the top of the wedge at about 150. Support lower is found at 144.44, 142.75 and 141.10 followed by 139.54. Under that and the mood gets a bit bearish. Continued Upside.

As the financial markets get back to full strength look for Gold to continue lower while Crude Oil continues higher. The US Dollar Index seems ready to continue higher while US Treasurys head lower, both with a chance that each may consolidate. The Shanghai Composite and Emerging Markets are biased to the upside with the possibility that each may also rest.

Volatility looks to remain low and may continue lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the big moves higher this week. Their charts all look higher as well with the IWM the strongest followed by the SPY and the QQQ pulling back or possibly consolidating. 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.

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