Saturday, August 30, 2014

SPY Trends and Influencers August 30, 2014

by Greg Harmon

Last week’s review of the macro market indicators suggested, heading into the last week of Summer that the equity markets were looking strong and ready for more. Elsewhere looked for Gold ($GLD) to continue lower in its intermediate term consolidation phase while Crude Oil ($USO) continued lower. The US Dollar Index ($UUP) and US Treasuries ($TLT) looked to continue to the upside. The Shanghai Composite ($SSEC) also looked strong and was biased higher while Emerging Markets ($EEM) tried to burn through past history near resistance and might consolidate for another week in their uptrend. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. The QQQ’s continued to look very strong and biased higher while the SPY was not quite as strong on the shorter timeframe and might need to consolidate. Both were at big round numbers that could stall any further move. The IWM looked to continue to improve in its consolidation range. Use this information as you prepare for the coming week and trad’em well.

The week played out with Gold holding under 1300 but finding a bottom while Crude Oil held lower but rebounded late in the week. The US Dollar continued the move higher but found resistance and pulled back while Treasuries just kept going up. The Shanghai Composite pulled back from resistance but bounced Friday while Emerging Markets made a new higher high before a small pullback. Volatility moved slightly higher but rejected at its SMA’s. The Equity Index ETF’s all started the week higher, but then consolidated that move the rest of the week, with the SPY and the QQQ both at significant round numbers. 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 d
SPY Weekly, $SPY
spy w

The SPY started the week with a Hanging Man doji candle higher, a possible reversal candle. It followed that with a Gravestone doji bringing out the calls for a move lower. And it did for the next two days but only marginally. In fact the Hollow Red candle Thursday, showing bullish intraday activity, marked the bottom as Friday confirmed it higher and closed at a new all-time high. The RSI remains very bullish and not overbought with the MACD rising and bullish in the daily chart. Note that the price is a bit extended from the 20 and 50 day SMA’s though. On the weekly chart the third small candle higher with some gap raises the thought of a possible Advance Block, signaling exhaustion. Watch the action though don’t get in front of it. The RSI is strong and rising on the weekly chart and the MACD is about to cross up. They support more upside. There is a 150% extension of the down move at 202.72 and a Measured Move at 208 with a 161.8% extension above that at 213.39. Support lower may come at 200 and 199 followed by 198.30 and 196.50. Uptrend Continues with Possible Consolidation.

As the market heads into September equities are strong but have had strong moves already. Elsewhere look for Gold to continue to hold around 1300 with a downward bias while Crude Oil has a short term bias higher in its consolidation. The US Dollar Index and US Treasuries are biased higher. The Shanghai Composite looks to continue to pullback in its recent rally while Emerging Markets are biased to the upside with the risk of consolidation at resistance continuing. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The IWM looks strongest and this may be a sign of rotation into it from the SPY and QQQ. The QQQ looks a bit better than the SPY having rested all week, where the SPY has some signs of short term exhaustion. But the trend of SPY and QQQ both remain higher. Use this information as you prepare for the coming week and trad’em well.

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