SPY Trends and Influencers November 12, 2011

Last week’s review of the macro market indicators looked for many of the trends from the past week to continue. Gold ($GLD) and Crude Oil ($USO) looked to head higher. Slightly weaker but still looking higher is the US Dollar Index ($UUP) and US Treasuries ($TLT) looked to be in a range with the next move biased higher but not yet determined. Both the Shanghai Composite ($SSEC) and Emerging Markets ($EEM) also looked better to the upside, with the Chinese market stronger. Volatility was 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 were likely to drive the direction of the equity markets for the 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.

The week began with Gold and Oil did mover higher in a straight line for Oil and zig zagging for Gold. The US Dollar and Treasuries did consolidate under resistance while holding support. The Shanghai Composite and Emerging Markets hit resistance and started to drift back lower. Volatility fell slightly but spiked mid week before falling again remaining in a higher range. The Equity Index ETF’s bounced around with the Volatility first up then down then ending the week higher, but in the same familiar range. 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 had a roller coaster week testing the top rail of a symmetrical triangle before falling back to the bottom rail and finishing back near the upper rail and the 200 day Simple Moving Average (SMA). The Relative Strength index (RSI) has remained bullish bouncing again off of the mid line and is heading higher while the Moving Average Convergence Divergence (MACD) indicator is improving towards a bullish cross after a brief stint in negative territory. Both support more upside. The weekly chart shows a bull flag continuing with a RSI that is trending higher and near a bullish break out, and a MACD that is positive and increasing. Bullish on this time frame as well.

Once again Gold and Crude oil look to head higher next week with the US Dollar index and US Treasuries looking to consolidate, with the Dollar biased higher and Treasuries lower on a break. The Shanghai Composite and Emerging Markets both are poised to head lower. Volatility looks to remain in a lower range with a bias to the downside supporting movement in the Equity Index ETF’s, SPY, IWM and QQQ to the upside. Again a violent move from either Treasuries or the US Dollar Index is likely to overwhelm the drift higher seen in the charts and force Equities in the opposite direction of the move. Watch and be prepared for it. Use this information as you prepare for the coming week and trade’m well.

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If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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