SPY Trends And Influencers: March 28, 2015

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators suggested, heading into Spring, College Basketball’s March Madness, the April options cycle and the last full week of March, that the equity markets were looking strong. Elsewhere looked for SPDR Gold Trust (ARCA:GLD) to bounce higher in its downtrend while Crude Oil US Oil Sands Inc (TO:USO) consolidated in its downtrend.

The US Dollar Index PowerShares db USD Index Bullish (NYSE:UUP) was consolidating the move up and US Treasuries iShares Barclays 20+ Year Treasury (ARCA:TLT) were looking strong. The Shanghai Composite db X-trackers Harvest China (NYSE:ASHR) was also strong and looked to move higher while iShares MSCI Emerging Markets (ARCA:EEM) were biased to the upside in the short run but not looking really strong.

Volatility iPath S&P 500 Vix Short Term Fut (ARCA:VXX) looked to remain subdued and drifting lower keeping the bias higher for the equity index ETF’s SPDR S&P 500 (ARCA:SPY), iShares Russell 2000 Index (ARCA:IWM) and PowerShares QQQ (NASDAQ:QQQ). Their charts also looked good for more upside with the IWM the strongest even at all-time highs, and the SPY and QQQ showed signs of a possible short term pause before another move up.

The week played out with gold continuing higher to end the week up while crude oil started started higher and continued until giving back a lot late in the week. The US dollar found support in its pullback while Treasuries ended their run higher, retreating on the week. The Shanghai Composite consolidated sideways at highs while Emerging Markets continue to flounder like a torn flag in the wind.

Volatility ha a small spike but quickly fell back. The Equity Index ETF’s started the week leaking lower before a big mid week drop and then consolidation, ending the week lower. All holding near the early March lows. What does this mean for the coming week? Lets look at some charts.

SPY Daily, SPY

The SPY started the week consolidating at the top of a long candle, where it ended last week. But by Tuesday it was moving lower, accelerating down with a near Marubozu candle Wednesday. Thursday saw a Spinning Top Doji, a possible reversal candle, and it confirmed higher Friday, but not in a very strong way. The SPY ended the week 2.2% lower. The RSI on the daily chart is is turning as it touches the bottom of the bullish range at 40, while the MACD continues to fall. The Bollinger Bands® on this timeframe are pointing slightly down as well. A bearish tone on the daily with some hope for a reversal from the candle sticks and the RSI.

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On the weekly chart the SPY almost printed a bearish engulfing candle. It was just shy on the upper wick, but none the less last week’s gains are gone. The RSI is still over the mid line in the bullish range, while the MACD is pointing and crossed down. The price goes into next week at the early March bottom. Will this make a double bottom and head to new highs? Or is this a pause enroute to another test at 198? There is resistance at 206.40 and 209 followed by 210.25 and 212.25. Support lower comes at 204.40 and 203 followed by 202 and 200 before 198.60. Consolidation in the Uptrend with a Downward Short Term Bias.

SPY Weekly, SPY

Heading into Quarter end and a holiday shortened week the Equity markets look short term vulnerable in their long term uptrends. Elsewhere look for gold to try higher in its short term uptrend but with trepidation while crude oil consolidates back in a channel. The US Dollar Index may continue to consolidate in its uptrend with a bias higher while US Treasuries are biased lower as they consolidate. The Shanghai Composite looks better to the upside in its consolidation and Emerging Markets are biased to the downside in their broad consolidation.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show a mixed bag with consolidation in the uptrends ion the longer timescale, with the IWM the strongest, while on the shorter timeframe the IWM and QQQ may reverse higher with the SPY still looking vulnerable.

Use this information as you prepare for the coming week and trad’em well.

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.

Written By: Dragonfly Capital