SPY Trends and Influencers October 13, 2012

Last week’s review of the macro market indicators suggested, heading into the week, keep an eye on Volatility ($VIX) as a signal for a turn, with the expectation that it will remain subdued. Gold ($GLD) looked to be set up to move lower short term but remain bullish longer term while Crude Oil ($USO) looked lower, but may be finding a bottom nearby. US Treasuries ($TLT) were set up to continue lower while the Dollar Index ($UUP) may continue to consolidate but was also biased lower. The Shanghai Composite ($SSEC) started trading again with a bias to continue the bounce within the downtrend from before the holiday while Emerging Markets ($EEM) consolidate at resistance. These all set up for the US Equity Index ETF’s, $SPY, $IWM and $QQQ to continue higher. The charts of the Indexes themselves agreed with the bias but showed signs of consolidation or a short pullback.

The week played out with Gold moving lower and holding above support while Crude Oil continued to show bottoming signs, basically consolidating for the week. The US Dollar continued to move between 79 and 80 while Treasuries moved up to the late September resistance. The Shanghai Composite continued higher and is near resistance while Emerging Markets moved in their recent range. Volatility bounced up off of the lows but remained subdued. The Equity Index ETF’s decided it was time for a pullback as the SPY, IWM and QQQ all moved lower. What does this mean for the coming week? Lets look at some charts.

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

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY broke through the rising support line on the daily chart Friday ending the week on the 50 day Simple Moving Average (SMA). The move took it below the September 26 low but keeps it in the blue consolidation channel. The Relative Strength Index (RSI) on the daily chart shows a new low not seem since June 6 and pointing lower with a Moving Average Convergence Divergence indicator (MACD) that is negative and increasing. These support further downside. The weekly chart shows a bull flag with a RSI that is bullish but falling and a MACD that is positive but fading toward the zero line. These also support more downside. The longer term rising trend support sits at about 138 just under the 20 week SMA and there is support at 141.60 and 139.50 before it gets there with 134.60 the next big support lower. Resistance is found above at 144.44 and 147.70. Consolidation with a Downward Bias.

Heading into the October Options Expiration week, markets are looking bleak. Gold looks ready to continue lower in the short run while Crude Oil is biased higher. The US Dollar Index seems content to move sideways while US Treasuries are biased lower. The Shanghai Composite is biased to the downside with Emerging Markets looking to continue their consolidation at resistance. Volatility looks to remain subdued, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, with the view from the Dollar and Treasuries supporting that as well. The charts of the Equity Index ETF’s don’t agree with this as the IWM and QQQ look solidly biased lower and only the SPY in consolidation. Use this information as you prepare for the coming week and trade’m well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview October 12, 2012

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