SPY Trends and Influencers November 12, 2016

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 noted that heading into the first full week of November and with the US elections Tuesday, the equity markets were weak and hemorrhaging. Elsewhere looked for Gold ($GLD) to continue higher in the short term while Crude Oil ($USO) continued to move lower.

The US Dollar Index ($DXY) looked to continue to the downside while US Treasuries ($TLT) were biased lower but consolidating. The Shanghai Composite ($ASHR) continued to drift higher while Emerging Markets ($EEM) were biased to the downside. Volatility ($VXX) looked to remain elevated keeping the bias lower for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts agreed and looked better to the downside on both the daily and weekly timeframes.

The week played out in two phases with the pre-election drift higher and then post election rotation. Gold started higher and then reversed to end at 6 month lows while Crude Oil also started higher and then fell later in the week. The US Dollar moved higher all week while Treasuries continued lower, accelerating after the election. The Shanghai Composite pushed higher, with a bit more gusto post election, while Emerging Markets started higher but reversed and dropped quickly, ending at 4 month lows.

Volatility pulled back slightly to start the week and crashed post election back to the normal range. The Equity Index ETF’s started the week drifting higher into the election. Election night saw limit down moves in the futures markets and then a full recovery and more the following day. Then came the rotation as the small cap IWM continued to rocket higher and the QQQ moved lower, while the SPY marked time. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY started the week with a gap higher off of its 200 day SMA, and ran to its 20 day SMA. It continued Tuesday into the election and up to short term resistance. Wednesday saw an open at the low after overnight futures had been limit down, and then a drive higher all day, erasing the drop and adding significant upside. Thursday saw it stall at prior important resistance/support levels after a small rise, and then held there with a small body candle Friday.

The daily chart shows the RSI stopped just shy of 60, and a move into the bullish zone, with the MACD rising though and the Bollinger BandsĀ® opening to the upside. A good week that will frustrate some as it could not clear resistance. The weekly chart shows a strong move higher. The RSI on this timeframe is moving up off of a lower low, with the price moving up off of a higher low, creating a Positive RSI Reversal.

This one targets a move to 229.33. The MACD is turning back up as well. There is resistance at 217 and 218 before 219 and 219.50. Support lower comes at 215.70 and 214 before 212.50 and 210.20. Uptrend Resumes with Possible Short Term Consolidation.

SPY Weekly, $SPY

With the election in the rearview mirror and heading into the last full week before Thanksgiving and the holiday season begins, equity markets are looking a bit mixed but positive. Elsewhere look for Gold to continue lower while Crude Oil moves lower in the short term as well.

The US Dollar Index looks strong and ready to challenge the 2015 highs while US Treasuries are biased continue lower. The Shanghai Composite is looking strong as it continues higher while Emerging Markets are at key support and looking weak if it does not hold. Volatility looks to remain at lower normal levels now that the election has passed keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ.

Their charts are a bit mixed though with the IWM leading a charge higher towards new all-time highs while the SPY stalls just below highs and the QQQ struggles in consolidation. Use this information as you prepare for the coming week and trad’em well.

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