SPY Trends and Influencers November 16, 2013

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 November options expiration week that the markets were rattled but came back strong. It looked for Gold ($GLD) to continue lower with Crude Oil ($USO), although the later was at a spot that could provide a reversal higher. The US Dollar Index ($UUP) remained strong and looked better higher while US Treasuries ($TLT) were biased to continue lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) were biased to the downside with the risk of the Chinese market running in place like last week. Volatility ($VIX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed better strength in the SPY followed by the QQQ and then the IWM the weakest, but none in full blown drive higher every day mode.

The week played out with Gold starting lower but finding support while Crude Oil took a small step lower. The US Dollar peaked and started to reverse lower low to end the week while Treasuries bounced. The Shanghai Composite drifted lower but bounced to end the week while Emerging Markets reversed higher. Volatility made a another move lower, reaching new 3 month lows. The Equity Index ETF’s reacted making new highs with the SPY making a new all-time high and the QQQ new 13 year highs, while the IWM recovered some ground. 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 d
SPY Weekly, $SPY
spy w

The SPY started the week with a potential Evening Star followed by a Doji confirming it lower, getting the bears all excited. But the Bullish Engulfing Marubozu Wednesday changed all that (Yellen, Schmellin, I look at prices). The follow up with moves higher Thursday and Friday left many longs happy for the week but the structure of that move raises a short term cautious flag. The smaller rising candles with no overlap, an Advance Block, can signal the exhaustion of a move. That does not mean reversal but can. The RSI is in bullish territory and rising though, not overbought on the daily chart, with a MACD turning back higher. Both support higher prices. The Measured Move out of the consolidation now targets the 187.50 area. The weekly chart gives less caution to the upward action. The long candle higher, moving away from the rising trend support line is creating space and may be the start of the next leg higher. The RSI on this timeframe has crept over 70 but is not extreme while the MACD is rising. There is more room higher in this chart. At new all-time highs, there is no resistance to halt it but using Fibonacci extensions of the last leg (127%, 138.2%, 150% and 161.8%) suggest possible resting spots at 181, 182.47, 184 and 185.53. Support lower comes at 177.65 and 175.90 followed by 174.75 and 173.60. Continued Upside With Short Term Caution.

Heading into the last week before the Holiday Season begins the markets continue to look strong. Next week look for Gold to consolidate in the longer downtrend while Crude Oil also holds in the downward move. The US Dollar Index looks better lower in the current short uptrend while US Treasuries look to consolidate their move. The Shanghai Composite and Emerging Markets are biased to the upside in the very short term with Chinese markets still lower long term and Emerging Markets in a rut. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves higher this past week. Their charts show the possibility for the next rotation, into IWM and out of QQQ. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview November 15, 2013


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