SPY Trends and Influencers: Monthly Edition October into November 2014

A monthly excerpt from the Premium subscriber version covering all 13 markets.

Last month in this space my Monthly Macro Review/Preview had the monthly outlook going into October suggested that the consolidation for Gold ($GLD) and Copper ($JJC) may be coming to an end with a downside resolution while Crude Oil ($USO) trended lower in its broad consolidation and Natural Gas ($UNG) reversed higher. The US Dollar Index ($UUP) appeared strong and ready to continue higher while US Treasuries ($TLT) also continued to look strong. The Shanghai Composite ($SSEC) was the strongest of the foreign markets and looked to continue higher while the German DAX ($EWG) consolidated under its round number of 10000 and Emerging Markets ($EEM) looked to continue to move lower. Volatility ($VXX) could go either way and was testing the top of the lower range experienced since the beginning of 2013, but with the VIX in a range between the 10 and 16 not a factor yet. These factors gave a positive bias to the equity index ETFs $SPY, $IWM and $QQQ. The individual charts though saw the QQQs looked the strongest and could easily continue higher while the SPY might consolidate and the IWM continued to consolidate while watching for a downside break as a risk. How does an additional month impact the longer term picture? Let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY, $SPY
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The SPY continued to hold at the all-time highs, but printed a Hanging Man candle, and with a long lower shadow, nearly touching the 20 month SMA. It is still in the upper half of the Andrews’ Pitchfork channel and being drawn to the Upper Median Line. Connection with the 20 month SMA can be a good thing so long as November does not confirm it lower. The RSI remains technically overbought but not extreme while the MACD is flat but not crossing down yet. There is resistance at 202 and the Fibonacci extensions to 202.72 and 213.40. Support lower comes at 191 and 183 before 176. Some Caution, But Uptrend Remains.

The monthly outlook suggests the downside for Gold and Oil will continue while Natural Gas and Copper continue to consolidate, but with the bias lower for Natural Gas. The US Dollar looks strong and should continue higher while US Treasuries remain in an uptrend but the reversal red flag is running up the flagpole. In the foreign markets the Shanghai Composite is very strong and should continue higher with Emerging Markets trying to reverse higher and the German DAX looking at a potential reversal lower. Volatility looks to remain low with the VIX in a range between 10 and 18. The confusion from falling Oil and Gold yet with a rising Dollar and Treasuries is reflected in the Equity markets. That uncertainty sees the SPY and QQQ continuing in their uptrends, but with a bit of caution on the SPY, while the IWM continues its consolidation that started the year. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

For complete analysis of the 13 markets summarized here join the premium service and read Macro Month in Review/Preview October into November 2014.

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