SPY Trends and Influencers: Monthly Edition March into April 2012

Last month in this space my Monthly Macro Review/Preview suggested the monthly outlook heading into March that the broad picture for the market looked even more bullish. In the Metals, Gold ($GLD) looked as it may consolidate in an uptrend while Copper ($JJC) was moving higher. In Fuel, Crude Oil ($USO) looked to continue higher and Natural Gas ($UNG) might be starting to bottom. The US Dollar Index ($UUP) looked to be in a consolidation range while Treasuries ($TLT) also consolidated but with an upward bias. In the Foreign Markets the Shanghai Composite ($SSEC) was showing early signs of a turn higher while Emerging Markets($EEM) moved higher in a broad range and the German DAX ($DAX) just rose. Volatility ($VIX) was slowing its fall but showed no signs of rising soon. A low Volatility environment with Metals and Oil biased higher, the Dollar and Bonds consolidating and Foreign Markets gave a positive influence set up a near perfect scenario for the Equity Index ETF’s $SPY, $IWM and $QQQ to continue higher. When looking at the charts of those ETF’s they concurred and were offering large upside targets. A breakout of Treasuries higher and near the flag target, collapse in Copper, Oil or Foreign Markets could change that bias but that was not in the charts. How does the additional month impact the longer term picture? Let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY, $SPY

The SPY continued its move higher toward the full retracement of the move lower from 2007. It has made some room to consolidate and still continue higher along the Fibonacci Fan line. The RSI is bullish and starting to level, well under the technically overbought level. The MACD is positive and growing. Both support a further move higher. Notice that the volume is rising slightly as it increases, a positive reinforcement. There is a Measured Move at 146 above the 2007 high. Support lower is found at 135. The bias continues to be to the upside.

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The monthly outlook suggests that Gold will continue lower with a chance of consolidation in the long term uptrend while Copper is ready to move higher. In the Fuels, Crude Oil looks good to the upside while Natural Gas continues to look like a natural disaster. The US Dollar Index looks better to the upside but may continue to consolidate while Treasuries are now biased lower. In the foreign markets the Shanghai Composite looks to continue lower with Emerging Markets moving sideways and Germany heading higher, something for everyone. The Volatility Index is biased lower but at the current levels is not expected to go much lower quickly but also not expected to rise soon. These influencers set the stage for the US Equity Index ETF’s, SPY, IWM and QQQ to continue higher and their charts agree. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

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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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