$SPY Trends and Influencers April 15, 2012 http://dragonflycap.com/?p=20174
$GLD $USO $UUP $TLT $VIX $IWM $QQQ $EEM $SSEC
Last week’s review of the macro market indicators saw heading into the new week many markets looking better to the downside. Gold ($GLD) and Crude Oil ($USO) looked to continue their recent trends lower. The US Dollar ($UUP) looked strong and ready to continue higher while Treasuries ($TLT) were better to the upside in the short run in their downtrend. The Shanghai Composite ($SSEC) may continue the bounce in the downtrend while Emerging Markets ($EEM) continue to consolidate. The Volatility Index ($VIX) looked ready to finally start the rise off the bottom. These influencers painted a picture that gave a downward bias to the US Equity ETF’s. The chart of the $SPY agreed and looked to continue lower while the $IWM and $QQQ may follow or just consolidate.
The week rolled out with Gold reversing higher but Oil continuing lower only to base later in the week. The US Dollar lost its steam and consolidated before tripping and then recovering late in the week, while Treasuries gapped higher and stayed there. The Shanghai Composite did continue the bounce higher while as Emerging Markets tested lower before rebounding. Volatility rose confirming the bottom is but remains at low levels. The Equity Index ETF’s ran lower before regaining some of the loss at week’s end. What does this mean for the coming week? Lets look at some charts.
The SPY tripped lower to start the week and never recovered. The daily chart shows a probe below the 50 day Simple Moving Average (SMA) for the first time since December and a finish nearly on top of it. The Relative Strength Index (RSI) on this timeframe bounced at the limit of bullish territory but is already pointing lower again with a Moving Average Convergence Divergence (MACD) that is negative and showing no signs of improving yet. The weekly chart shows the fall from a near full retracement of the drop from the financial crisis and below the Fibonacci Fan line. The RSI on this timeframe is still strongly in bullish territory, as is the trend, but it has turned lower with a MACD that is fading with a negative cross looking more likely. Support comes at 135.60 followed by 133.40 and 130. A bounce higher finds resistance at 139.80-140 followed by the previous high at 142.21. For next week look for a Downside Bias in the Longer Term Uptrend.
As the market heads into the height of earnings season the mood has turned a bit more bearish. Gold continues to look better to the downside, but would not surprise if it hovers while Crude Oil looks better lower in the very short term within the uptrend. The US Dollar Index and US Treasuries continue their upside bias. The Shanghai Composite is verging on moving from an upside bounce to a uptrend while Emerging Markets look like the consolidation may be ending with resolution to the downside. The Volatility Index has solidly confirmed that the bottom is in and the bias is to the upside. These influencers create a mosaic giving the Equity Index ETF’s SPY, IWM and QQQ a downward bias and their charts in general agree. The SPY looks to be the most vulnerable for a further fall with the IWM showing a bit more stability as it has moved lower fastest and the QQQ still the strongest, but cracking. Use this information as you prepare for the coming week and trade’m well.