SPY Trends and Influencers November 29, 2014

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 the shortened Thanksgiving Holiday week that the equity markets looked solid longer term but a bit stretched in the short term. Elsewhere markets all were looking better to the upside. It looked for Gold ($GLD) to continue the bounce higher while Crude Oil ($USO) might join it as it is also biased to the upside short term.

The US Dollar Index ($UUP) looked ready to resume its uptrend while US Treasuries ($TLT) rounded out of a short term pullback and continued up as well. The Shanghai Composite ($FXI) looked to continue its uptrend and Emerging Markets ($EEM) might also be reversing higher. Volatility ($VXX) looked to remain subdued keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts continued to show divergence as the SPY and QQQ look higher in the intermediate term while the IWM continues sideways in a range. All three looked at risk of a short term pullback for the week, even if only Monday.

The week played out with Gold holding at 1200, the round number, before dropping Friday while Crude Oil resumed its move lower. The US Dollar came back to test support before moving higher while Treasuries continued the move higher. The Shanghai Composite broke consolidation higher while Emerging Markets pulled back from resistance.

Volatility made a new two month low before rebounding slightly Friday, but still at very low levels. The Equity Index ETF’s held tight ranges, with the SPY and the QQQ at the highs, and the IWM holding its ground. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY
spy d
SPY Weekly, $SPY
spy w

The SPY started the short week with an inside day Monday, holding the gap up Friday. From there the range widened slightly but was tight all week at just over a 50 bp range. The daily chart shows some signs of exhaustion as the MACD turned lower towards a cross down and the RSI is pulling back slightly in the overbought region. Neither are big enough or defined enough moves to rely on though, so the trend remains up.

On the weekly chart the price action printed a doji. This is a signal of indecision, and can resolve either up or down, with confirmation next week. The Bollinger bands are open to the upside to allow a continuation and the RSI is rising and bullish with a rising MACD all supporting continued upward price action.

There is no resistance over the week’s high at 207.87 Friday, but Fibonacci extensions of the September to October leg lower would give targets of 209.53, 211.89 and 214.25 on a 138.2%, 150% and 161.8% extension. Traders will be watching those levels. Support lower comes at 205.70 and 204.80 followed by 203.25 and 201.90. Short Term Consolidation or Retracement Possible in the Uptrend.

As the calendar turns to December the Equity markets are showing signs of divergence or rotation but with continued strength. Elsewhere look for Gold to continue lower, resuming its downtrend while Crude Oil also continues lower. The US Dollar Index and US Treasuries look strong though and are biased to continue to the upside.

The Shanghai Composite is also strong and looks to continue higher while Emerging Markets are consolidating in what may be a bearish pattern. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show continued strength in the QQQ, with the SPY a bit stretched short term but looking good on the intermediate timeframe, while the IWM continues to consolidate in the longer consolidation range. 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 28, 2014

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