SPY Trends and Influencers November 17, 2012

Last week’s review of the macro market indicators suggested, as we shifted focus from the election to the fiscal cliff, that the market was revolting. Gold ($GLD) looked to continue in its uptrend while Crude Oil ($USO) consolidated with a bias lower. The US Dollar Index ($UUP) and US Treasuries ($TLT) were set to move higher. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) looked to consolidate, with the Shanghai Composite doing so in a downtrend. Volatility looked to remain low but slowly trending higher making a hard way for the equity index ETF’s $SPY, $QQQ, which all looked better to the downside, despite some signs of possible reversals.

The week played out with Gold consolidating before leaking lower towards the end of the week while Crude Oil drifted higher in a tight range. The US Dollar held a tight consolidation week before moving higher Friday while Treasuries held at the highs. The Shanghai Composite continued its move lower with Emerging Markets following lower as well. Volatility held in a tight range, arresting the uptrend. These influencers did nothing to stop the trend lower in the Equity Index ETF’s, with the SPY, IWM and QQQ all continuing 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 continued its trend lower with a strong move down mid week, ending the week in technically oversold territory with a Hammer on strong volume. Hmm. A possible reversal if confirmed higher. The relative Strength Index (RSI) is bearish and the Moving Average Convergence Divergence indicator (MACD) is negative, both supporting more downside, on the daily charts. A break of 134.70 lower has a Measured Move to 133.50 and continues the downtrend. Support is found at 135.10 and 134.40 followed by 132.80 and 130. Resistance is found higher at 137.30 and 138.60 and 140.10. The weekly view looks lower. The RSI is testing the lows from May and falling with a MACD that is negative and falling. The volume trend has been rising as well. Hammer, rising volume, short term indicators saying get cautious. Continued Downside Bias Watching for Reversal Confirmation.

Heading into the shortened Thanksgiving week there are signs of a bottom, but not any reason to buy yet. Gold looks lower within the neutral long term channel while Crude Oil is biased higher in the consolidation. The US Dollar Index looks to continue higher while US Treasuries may be ready for a pullback in the uptrend. The Shanghai Composite and Emerging Markets are biased to the downside. Volatility looks to remain low with an upward bias keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ, despite the potential reversal candles on their charts. Use this information as you prepare for the coming week and trade’m well.

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Dragonfly Capital Views Performance Through November 2012 Expiry

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