SPY Trends and Influencers November 2, 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, moving into the Halloween week and ending the seasonally scary October, that the markets are looking strong. Specifically it looked for Gold ($GLD) to continue higher while Crude Oil ($USO) was ready for a bounce after a downtrend. The US Dollar Index ($UUP) remained in a downtrend but at support so a reversal was possible, while US Treasuries ($TLT) were poised to continue higher. The Shanghai Composite ($SSEC) looked weak and ready to continue lower while Emerging Markets ($EEM) consolidated in the pullback in the uptrend. Volatility ($VIX) looked to remain low and unimportant keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts were showing that the SPY was strong and ready to move higher while the IWM and QQQ were consolidating. This might be the start of another round of rotation from the IWM and QQQ into the large cap stock in the SPY and Dow Jones Industrials.

The week played out with Gold continuing higher, for part of one day and then reversing while Crude Oil did the same. The US Dollar did reverse and Treasuries turned lower. The Shanghai Composite consolidated at the lows while Emerging Markets continued in a narrow range. Volatility moved sideways at the recent lows, continuing last weeks non action. The Equity Index ETF’s reacted by making new all time highs on the SPY and IWM and new 13 year highs on the QQQ before all pulled back. 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 by continuing the move higher from last week. It made a new all time high intraday Wednesday before reversing and finishing down on the day. The rest of the week consolidated that move ending with a Hammer, possible reversal. The daily chart shows the RSI has pulled back but the MACD is still rolling lower and price is extended from the SMA. The weekly chart shows a possible Evening Star but the other indicators continue to support more upside. The RSI is rising and the MACD has crossed higher and is rising. There is support lower at 175.93 and 173.60 followed by 170.90. Resistance higher comes at 177.51 and there are Fibonacci extensions at 177.93 and 179.11. A Measured Move higher now shows up at 178.77. Consolidation or Pullback Possible in the Uptrend.

Heading into the last 2 months of the year the markets still look positive but may need a short term pullback. Look for Gold and Crude Oil to continue lower. The US Dollar Index wants to move higher while US Treasuries are biased lower. The Shanghai Composite may consolidate but it and Emerging Markets are biased to the downside. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest a possible pullback continuing for the IWM, with the QQQ possibly joining it and the SPY consolidating but maybe ready to reverse higher again. Use this information as you prepare for the coming week and trad’em well.

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