SPY Trends and Influencers November 5, 2011

Last week’s review of the macro market indicators looked as we head into the last 2 months of the year that Gold ($GLD) and Crude Oil ($USO) were ready to continue higher with a chance that Gold consolidates the recent gains. On the other hand the US Dollar ($UUP) and US Treasuries ($TLT) were set up to continue lower. The Shanghai Composite ($SSEC) was showing signs of a reversal higher while Emerging Markets ($EEM) also look higher, but since they are at resistance may consolidate. Volatility ($VIX) looked to continue lower supporting further upside for the US Equity Index ETF’s $SPY, $IWM and $QQQ. US Markets all had a good run the previous week and it would not be a surprise to see a pullback to consolidate the gains. The QQQ looked the strongest with a steady trend higher while the IWM exhibited topping tails and largest move for the week, the most vulnerable. Despite that they all confirmed the trend higher. Continue to watch the US Dollar and US Treasuries for signs of a reversal that could halt the Equity run higher.

Both Gold and Oil did move higher after starting the week lower, but not by much. The US Dollar moved higher and then consolidated while Treasuries also ran higher before pulling back. The Shanghai Composite continued its move higher while Emerging Markets consolidated. Volatility rebounded and then trickled lower through out the week. As a result of the US Dollar and Treasury strength the Equity Index ETF’s got smacked lower before recovering about about half of the loss. 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 was crushed early in the week but then rose back recovering a little over half of the initial loss. The RSI on the daily chart held at the mid line during the fall and has moved back higher while the MACD has the two Exponential Moving Average (EMA) components on top of each other avoiding a cross for now. The weekly chart printed an inside candle from the real body on the 50 week SMA. The RSI on this view remains in an uptrend with the MACD crossed and growing more positive, both supporting further upside. Next week is biased to the upside, but needs to get through the 200 day SMA and hold to keep going.

Next week looks for many of the trends from the past week to continue. Gold and Crude Oil look to head higher. Slightly weaker but still looking higher is the US Dollar Index and US Treasuries look to be in a range with the next move biased higher but not yet determined. Both the Shanghai Composite and Emerging Markets also look better to the upside, with the Chinese market stronger. Volatility is in a lower range but stalled at the top of it creating an environment for the Equity Index ETF’s SPY, IWM and QQQ to head higher. The US Dollar and Treasuries are likely to drive the direction of the equity markets next week. If they stay in a range or consolidate then look for Equities to continue to move slowly higher. A sharp rally by either will likely tank the equity markets. Use this information as you prepare for the coming week and trade’m well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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