SPY Trends and Influencers: Monthly Edition November into December 2014

• Posted by Greg Harmon
• on December 2nd, 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 suggesting the downside for Gold ($GLD) and Oil ($USO) will continue while Natural Gas ($UNG) and Copper ($JJC) continue to consolidate, but with the bias lower for Natural Gas. The US Dollar ($UUP) looks strong and should continue higher while US Treasuries ($TLT) remain in an uptrend but the reversal red flag is running up the flagpole. In the foreign markets the Shanghai Composite ($FXI) is very strong and should continue higher with Emerging Markets ($EEM) trying to reverse higher and the German DAX ($EWG) looking at a potential reversal lower. Volatility ($VXX) 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.  How does an additional month impact the longer term picture? Let’s take a look.

SPY, $SPY

The SPY broke the 3 month consolidation higher in November, continuing the trend higher. The price continues to be drawn towards the Upper Median Line of the Andrews’ Pitchfork. The 161.8% extension of the retracement of the down\ward leg from the financial crisis looms overhead at 213.40. Seems the touch near the rising 20 moth SMA was enough of a reset for now. The RSI continues to be overbought, but barely and is moving sideways. Translation: there is nothing extreme in the momentum indicator. The MACD is rising but flattening. There is support lower at 202 and the round number at 200 followed by 191. Continued Upward Price Action.

The monthly outlook suggests the downside for Gold and Copper will continue while the prospect lower for Copper may just be getting started. Crude Oil continues to be biased to the downside while Natural Gas holds in a range, consolidating. The US Dollar Index and US Treasuries look to continue higher. The Shanghai Composite looks the strongest of the foreign markets and strongly biased to the upside while the German DAX consolidates with an upward bias and Emerging Markets look to continue to move sideways in a wide range. Volatility looks to remain in the lower range experienced since 2013 with the VIX in a range between 10 and 18. Against this backdrop, the Equity Index ETF’s SPY, IWM and QQQ are set up to continue higher in the coming months. As noted on the individual charts the IWM may just continue sideways but the SPY and QQQ both look to continue higher. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

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